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Can VC's be also a Value investor?

Created by : Esha Johar, Risk Analyst, Irevna  | 10 09 2010 06:09:21 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : India(Markets)
Keywords : investing in stocks vc as a value investor value investors funding in startups vc's as value investor
Activity:  169 views;  last activity : 04 07 2011 08:17:09 +0000

Value investing – the analytical techniques for valuing securities and seeking to invest in those securities in the context of their underlying value. As a venture capitalist trying their hands on investment lessons, I wondered: can VCs be value investors? After all, the philosophy of value investing, in theory, should cut across all asset classes and managers. The precepts and principals therefore should apply to the venture capital business as well.

So, can VC's they be a value investor?? after all normal investors also invest money in stocks and VC's invest in a startup...what are your views people..

  
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Esha you are right but it totally depend on VC Investors & period of investment..
By Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.  | 10 11 2010 16:15:20 +0000
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I don't think so, as investing in bargain-priced securities provides a ‘margin of safety’, room for error, imprecision, bad luck, or the up and down of the economy and stock market.  Unfortunately, VCs don’t operate with a margin of safety, even if they are able to find and negotiate good deals. Later stage investors may have downside protection if they buy smart, but early-stage VCs do not. If a portfolio company goes bad, there is typically barely any salvage value.  So, I don't think VC's can become a value investor..
By Esha Johar, Risk Analyst, Irevna  | 10 09 2010 06:11:14 +0000
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