Forbes Article Highlights Edna McConnell Clark as Example of Thinking Like a Venture Capitalist

Wednesday, August 24, 2016

Forbes Article Highlights Edna McConnell Clark as Example of Thinking Like a Venture Capitalist

In the private sector, no one thinks that great investments are easy to find. A 2010 study found that the median private equity or venture capital fund requires more than three investment team members reviewing 80 companies for a year to close a single transaction. For-profit investors who find one truly great deal per year are considered stars in the field. Recently, I spent the day with the team at Battery Ventures. They have 50 professionals working in an essentially scientific way to find the best opportunities. The team evaluates thousands of potential deals per year, but averages just 10 investments; without a strict process, the firm would likely not have recorded the number of portfolio company exits that it has. In February, Battery disclosed that in the previous three calendar years, it had six portfolio companies stage initial-public offerings, while 15 were purchased by acquirers.

Compare that investment approach with a foundation program officer’s, or that of someone working for an individual philanthropist. What if they made only one commitment to a grantee per year? In most cases, this would not be enough to keep their job! If donors want to change the world—and recent Bridgespan research shows that 80% of the most generous philanthropists do—how hard do funders need to work to find the right investment opportunities?...