Thursday, June 02, 2005

The benefits of staying power

While i have never believed in the averaging in the public markets, having seen the investors in myzus my first start-up practice the same in private equity has given me a new founded respect and admiration for their ability to take big risks while at the same time thinking long term. When every VC was trying to shut down their investments and redirect capital at the height of the dotcom crash, these guys rationalized their portfolios, hiked their stakes in companies to make them more meaningful and transitioned the teams from the more mercurial founder led companies to manager driven professional companies. Most admirably, they stuck with every company they invested in, not adding much value but providing enough capital to fuel the managers who once they realised that this was a strong partner not going to back out, fueled their energy into doing something with the company. Over time, I'm sure they will make money on every investment, nothing spectacular but a good exercise in preservation and growth of capital in an environment where returns are pathetic and even investing in the public markets carry considerable risk. I would say what I appreciate about their approach is that they take risks they can afford and stick by the entrepreneur in good and bad times realizing that the biggest value that a VC provides is Capital. I wish them all the best and am privileged to have seen the inner workings of such a firm at such close quarters. I'm sure the rest of the team at myzus too has benefitted similarly by working in close proximity with their other portfolio companies.

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