Bevans Branham: Why Not Invest Abroad
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Bevans Branham: Why Not Invest Abroad

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Bevans Branham takes a look at American-based venture capitalists and why they are afraid to invest in companies based in other countries. What can be done to help prevent U.S. investors from missing ...

Bevans Branham takes a look at American-based venture capitalists and why they are afraid to invest in companies based in other countries. What can be done to help prevent U.S. investors from missing the boat on potentially great opportunities?

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Bevans Branham: Why Not Invest Abroad Bevans Branham: Why Not Invest Abroad Presentation Transcript

  • Want  to  invest?  Why  not   consider  global  markets.     An  ar8cle  by  Bevans  Branham  
  • Every  year,  venture  capitalists  are  asked  about   their  thoughts  regarding  inves8ng  outside  of   their  home  country.  It  seems  to  make  sense  that   these  types  of  investments  would  be  very   lucra8ve,  countries  outside  of  America  account   for  86%  of  the  users  of  top  internet  sites  like   Facebook,  TwiFer,  LinkedIn,  etc.  Shouldn’t   venture  capitalists  be  tapping  into  this  market  as   well?  
  • Well,  it  turns  out  that  many  of  these  investors   who  spend  so  much  8me  and  money  in  their   home  country  (usually  Silicone  Valley  area)  are   very  averse  to  inves8ng  in  companies  outside  of   the  United  States.  What  are  some  of  the  reasons   that  this  is  happening,  and  what  can  we  do   about  it  to  ensure  that  we  don’t  miss  the  next   big  tech  wave?   View slide
  • Home  Bias   It  shouldn’t  be  a  huge  surprise  to  anyone  when  I   say  that  venture  capitalists  usually  have  a   hometown  bias.  If  you  grew  up,  went  to  school,   started  your  first  company,  and  currently  reside  in   an  area  like  Silicone  Valley  or  New  York  City  it’s  very   likely  that  you’re  going  to  think  that  companies  and   talent  from  that  par8cular  area  is  top-­‐notch.  This   type  of  bias  happens  all  the  8me  (and  not  just  with   VC’s),  so  it’s  no  surprise  that  when  it  comes  to   spending  money,  VC’s  are  a  liFle  nepo8s8c.   View slide
  • Physical  Proximity   If  you’re  inves8ng  in  an  early-­‐stage  startup  it’s  very   likely  that  you’re  going  to  want  to  be  involved  in   many  of  the  decisions  that  this  company  is  going  to   be  making.  If  it  requires  a  10  hour  flight  for  you  to   get  to  a  board  mee8ng,  this  could  be  a  major   barrier  to  you  being  as  effec8ve  with  this  company   as  opposed  to  one  which  is  located  in  your   hometown.  Because  of  this,  many  VC’s  don’t  want   to  invest  in  poten8ally-­‐good  companies  not  located   near  them  because  they  feel  as  though  they  won’t   be  able  to  help  out  as  much  as  they’d  like  to.  
  • Though  there  are  these  obstacles,  this  shouldn’t   deter  everyone  from  inves8ng  abroad.  In  fact,   entrepreneurs  all  over  say  that  Silicon  Valley   knowledge  and  exper8se  in  places  like  China,   Japan,  Africa,  and  Mexico  is  in  very  high   demand.  
  • If  an  investment  company  were  able  to  secure   loca8ons  in  these  areas  it’s  very  likely  that  they   would  be  a  hit  among  the  entrepreneurs  of  the   area.  Along  with  that,  they  would  have  the   unique  ability  to  invest  in  companies  that  Silicon   Valley  based  investment  firms  would  be  too   afraid  to  invest  in.  Hopefully  these  barriers  will   be  eliminated  in  the  near  future  so  we  don’t   miss  the  boat  on  the  big  companies  of  the  next   10  years.  
  • Originally  posted  on:  Bevans  Branham's  Blog