Building a Venture Portfolio
Venture Capital Fundamentals (VC 101) | Class 4
Venture capital is a high-risk asset class where a small number of successful investments drive the majority of returns. This lesson introduces how diversification plays a critical role in venture portfolio construction.
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What Is This Lesson?
An overview of venture portfolio construction. - Home
Who Is It For?
Those looking to understand how VC portfolios are built.
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What You’ll Learn
- HomeWhy venture capital follows a power law
- HomeThe role of diversification in venture portfolios
- HomeHow portfolios are built across stage, sector, and geography
- HomeHow portfolio size impacts risk and outcomes
- HomeWhy a small number of investments drive returns
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Frequently Asked Questions
FAQ
Building a Venture Portfolio
Venture capital is widely considered a high-risk asset class because the outcome of any single investment is highly uncertain. Many individual companies fail, making it difficult to predict which investments will succeed. As a result, building a diversified portfolio is essential to participating in the overall outcomes of venture investing.
Diversification in venture capital goes beyond simply investing in multiple companies. Portfolios are often constructed across stages, sectors, and geographies. This can include a mix of seed, early, and growth-stage investments, as well as exposure to different industries and regions. This approach helps ensure that a portfolio is not overly concentrated in any one area.
Unlike many traditional asset classes, venture capital follows a power law dynamic. In a typical portfolio, more than half of investments may fail, while a small number generate moderate returns. A very small subset of companies, however, can produce outsized outcomes— sometimes returning 10x, 20x, or more—and these investments tend to drive the overall performance of the portfolio.
Because of this dynamic, portfolio size plays an important role in venture investing. Small portfolios with only a handful of investments are less likely to capture these high-performing outcomes. Larger, more diversified portfolios increase the likelihood of including the companies that drive returns.
Disciplined venture investing also involves deploying capital over time and across multiple opportunities. By investing systematically and maintaining diversification, investors can better align with the long-term nature of the asset class and its return profile.
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About Your Instructors
Laura Rippy
Managing Partner, Green D, Yard & Women’s FundLaura serves as Managing Partner of the Green D, Yard, and Women’s Funds and is a member of the Alumni Ventures Board, leading multiple fund strategies across the firm. She brings extensive leadership experience as a serial CEO, Chairman, board member, and executive in high-tech companies, including Microsoft. Recognized for her impact in venture, she was ranked among Business Insider’s Best Early-Stage Investors in both 2024 and 2025.
Andy Ervin
Deputy Chief Investment OfficerAndy is Deputy Chief Investment Officer at Alumni Ventures, where he supports investment operations, analytics, and portfolio management. He brings experience across venture-backed startups, consulting, and financial services, including leadership roles at MiniLuxe and The Parthenon Group. Andy holds a bachelor’s degree from Penn State University and an MBA from the Tuck School of Business at Dartmouth.
Mike Collins
CEOMike Collins is an experienced operator across nearly every facet of venturing—from angel investing and venture capital to new business and product launches, as well as innovation consulting. He is a serial entrepreneur who has founded multiple companies, including one partially owned by WPP, and began his career at the venture capital firm TA Associates.
Mark D. Edwards
Chief Investment OfficerMark directs all investment, portfolio management, and capital allocation activity at Alumni Ventures, overseeing a team of approximately 40 investment professionals. He brings more than two decades of experience in the private equity industry, with roles at firms including DLJ Merchant Banking Partners and JLL Partners, and began his career as an investment banker at Donaldson, Lufkin & Jenrette.
Peter MacEwan
Deputy Chief Community OfficerPeter brings experience across both nonprofit and business-sector startups, with a strong track record of building teams and driving strategic growth across multiple seed- and early-stage ventures. He began his journey with Alumni Ventures as a Fellow and has steadily advanced within the organization since then.
Luke Antal
Co-Founder & Chief Community OfficerLuke is an experienced startup and tech executive who has built and continues to oversee many of the processes, systems, and teams that power Alumni Ventures’ fundraising initiatives. With a strong focus on marketing, sales operations, and customer experience, he has played a key role in scaling multiple startups, often as a founder or employee #1.
Anton Simunovic
Chief Investment Officer EmeritusAnton is Chief Investment Officer Emeritus at Alumni Ventures, where he previously served as Chief Investment Officer. He brings over 20 years of experience as a venture capital investor, entrepreneur, and operating executive across companies ranging from startups to Fortune 10 organizations. Anton holds a BSc in Engineering from Queen’s University and an MBA from Harvard Business School.
Alumni Ventures and its personnel provide investment advice only to affiliated venture capital funds. AV Academy is not personalized advice for any participant.
This communication is from Alumni Ventures, a for-profit venture capital company that is not affiliated with or endorsed by any school. It is not personalized advice, and AV only provides advice to its client funds. This communication is neither an offer to sell, nor a solicitation of an offer to purchase, any security. Such offers are made only pursuant to the formal offering documents for the fund(s) concerned, and describe significant risks and other material information that should be carefully considered before investing. For additional information, please see here. Achievement of investment objectives, including any amount of investment return, cannot be guaranteed. Co-investors are shown for illustrative purposes only, do not reflect all organizations with which AV co-invests, and do not necessarily indicate future co-investors. Example portfolio companies shown are not available to future investors, except potentially in the case of follow-on investments. Venture capital investing involves substantial risk, including risk of loss of all capital invested. Diversification cannot prevent investment loss; it is a strategy to mitigate investment risk. This communication includes forward-looking statements, generally consisting of any statement pertaining to any issue other than historical fact, including without limitation predictions, financial projections, the anticipated results of the execution of any plan or strategy, the expectation or belief of the speaker, or other events or circumstances to exist in the future. Forward-looking statements are not representations of actual fact, depend on certain assumptions that may not be realized, and are not guaranteed to occur. Any forward-looking statements included in this communication speak only as of the date of the communication. AV and its affiliates disclaim any obligation to update, amend, or alter such forward-looking statements, whether due to subsequent events, new information, or otherwise.