The Case for Investing in Venture Capital in Uncertain Times With Spike Ventures
Managing Partner Todd McIntyre (MBA ’94) discusses the benefits of diversifying your portfolio with venture capital
Many investors find themselves wondering if now is the right time to invest in venture capital. Todd McIntyre (MBA ’94), Managing Partner of Spike Ventures, shares several reasons to consider doing so.
At Spike Ventures we’ve been fortunate to have an eventful summer. We welcomed Senior Associate Naren Ramaswamy and promoted Alim Giga to Senior Principal. We nearly finished building Spike Ventures Fund 5, including investments in software development platform DevRev, constituent engagement platform Indigov, and global business bank Jeeves. Finally, we had the opportunity to return capital to investors after Shopify completed its acquisition of Spike portfolio company Deliverr.*
In September, we will begin our annual cycle and launch Spike Ventures Fund 6. We will provide you with detailed updates on the progress of the entire Spike portfolio and offer opportunities for you to connect with our team. As we wind down our summer and prepare for the fall season, I thought I would share some of our thoughts with you about the current market environment.
The Case for Venture Capital in Uncertain Times
In recent months, we’ve all experienced a great amount of macroeconomic uncertainty. We’ve seen wild swings in the public markets. We’ve seen big changes in real estate values. And we’ve seen massive moves in the prices for everything from oil to cryptocurrency to gold. In view of these turbulent market conditions, many investors find themselves wondering if now is the right time to invest in venture capital. We believe there are many reasons to consider diversifying your portfolio with VC.
As an investor, you should have venture capital on your radar for three important reasons: returns, diversification, and innovation.
- Returns: Venture capital is a long-term asset class that has outperformed the S&P over many periods, with the 25-year pooled internal rate of return averaging north of 30%.**
- Diversification: Venture capital is largely uncorrelated to other asset classes, whether it’s public equities, bonds, commodities like oil and gold, or the price of crypto.
- Innovation: Investing in venture means you’re investing in companies and technologies with the potential to reshape the future. Technology and innovation have always been drivers of value creation, making venture a key consideration for a wealth-building strategy.
But why invest in this current market environment? Two words: volatility and entrepreneurship.
With a long-term investment horizon, venture capital can be a strong fit for intergenerational wealth planning. And in the wake of the pandemic and the Great Resignation, entrepreneurship is hotter than ever. The U.S. Census Bureau reported that 5.4 million new business applications were filed in 2021 alone, a new record.
Entrepreneurship is an engine of new job creation in our economy, and entrepreneurship programs are more popular than ever at many universities, especially Stanford. It’s the job of venture capitalists to identify the best entrepreneurs and help them translate their vision into large and lasting economic value.
Spike Ventures provides accredited investors with access to venture capital and all these attractive benefits. We employ a disciplined process to co-invest alongside well-established VC firms in high-potential companies as we build annual portfolios of 20-30 private companies diversified by stage, sector, and geography. Won’t you join us?
Todd McIntyreManaging Partner, Spike Ventures
Todd has more than 20 years of experience as a venture capital investor, entrepreneur, and senior technology operating executive, as well as deep knowledge of intellectual property and IP licensing. He has worked with capital structures ranging from seed stage investments to public offerings and has experience in many sectors, including consumer media and web, optoelectronics, telecoms, cleantech, and healthcare. Most recently, he was founding Managing Partner of Grey Sky Venture Partners, a life sciences and digital health fund that pioneered a venture finance model combining early-stage capital with fund-owned intellectual property. He also served as a senior business leader in a technology incubator fund, where he led efforts to build, fund, and spin out several new deep tech businesses. Todd received his BA from Hendrix College and holds an MBA from Stanford Graduate School of Business.
*For illustration purposes only. These investments are not intended to suggest any level of investment returns; not necessarily indicative of investments invested by any one fund or investor. Many returns in investments result in the loss of capital invested. These investments are not available to future fund investors except potentially in certain follow-on investment options. To see the performance of each exited investment for all Alumni Ventures funds over the last twelve months and our historical performance since 2014, click here.
**Cambridge Associates data is compiled and reported by Cambridge Associates based on self-reporting from institutional investors, VC firms, and other financial services firms and may be subject to reporting bias, including self-selection or other biases.