19

Sit Back and Let Someone Else Do the Work

Investing in Startups through Seed Funds and Venture Funds

THROUGHOUT THIS BOOK, I've been hammering home the importance of approaching startup investing with a serious, professional attitude. It's the only way to get involved in this high-risk/high-return game with a reasonable chance of success. If you're not interested in doing the homework and legwork necessary to learn about the entrepreneurs, companies, and industries in which you'll be investing, and then putting your money to work calmly and steadily over a long period of time while your assets are completely illiquid, I suggest you reconsider the idea of directly investing in startups.

However, that doesn't necessarily mean you should just walk off and play somewhere else. As the early-stage entrepreneurial sector becomes an ever increasing part of the global financing world, an industry is rising around it to service the financial needs of a wide variety of investors, including those who don't have the time or expertise to make their own direct investments but still want exposure to the asset class.

The first venture capital fund was founded in the United States in 1946, when Georges Doriot, the Dean of Harvard Business School and future founder of INSEAD (the leading international business school) created American Research and Development Corporation with Ralph Flanders and Karl Compton (a former president of MIT), to encourage private sector investments in businesses run ...

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