In this topsy-turvy economy — where the top business leaders are figuring out how to survive — how can you make your best return? For the answer, I thought I’d look at venture capitalists. Venture capitalists (or VCs) don’t invest the way everyone else does. They don’t put their money in mutual funds or bonds and hope for a nice return.
VCs invest in multiple new companies on the chance one might earn a huge return one day. Out of ten investments, one might be a home run with a 10x+ return, a few might earn a 2-3x return or break even, while up to five of the companies will likely go out of business.
If you watch Shark Tank, you’ll hear investors like Kevin O’Leary, Daymond John, Barbara Corcoran say the same thing as smart venture capitalists say — don’t invest in companies, invest in people.
So what kind of people get the best return? At a recent W3BX Investor Summit, I attended, I heard a surprising answer. You might think at a web conference the experts would say the best people to invest in are the ones with the best new tech or medical ideas. However, that wasn’t the case.
At the conference, Shark Tank host Kevin O’Leary was on stage with Mark Yusko from Morgan Creek, a successful venture capitalist. They were discussing an idea that VC Tim Draper had just said: “Women are going to power the next bull run.” O’Leary and Yusko both agreed the best people to invest in were women.
They both said that female entrepreneurs are more likely to start profitable companies and women investors have the best overall market returns.
Women Entrepreneurs Produce More Profits
According to O’Leary, women entrepreneurs are more reliable for producing profits. As a Shark Tank investor, the results show his women-run companies have been the most profitable. This is why over 55 percent of the companies he invests in are run by women.
O’Leary suggested the reason for women’s success was women tended to be more level-headed than their male counterparts and took better-calculated risks. O’Leary and Yusko also agreed women leaders have a more goal-oriented approach to business, setting targets and meeting them, unlike their male counterparts, who, generally, tend to go more by intuition.
So if you’re looking for a company to invest in to turn a profit, think about choosing a woman entrepreneur. I personally work with many women entrepreneurs in my keynote-speaking company. As a group, they tend to be some of the most thoughtful, intelligent, and successful people.
Women Investors Have the Best Returns
Women investors also produce the best overall results in the market, according to Yusko. Citing the 2021 Women and Investing Study by Fidelity Investments, he said female investors earn 40 basis points more on their investments than males.
Yusko believes the reason for women’s success in investing is they are more likely to take a holistic, 360-degree view of their investments. They will let poor investments go. Male investors, on the other hand, tend to either be too analytical or too gung-ho–and don’t want to let go of a bad investment.
So if you’re looking for your next portfolio manager, consider a woman manager. Or maybe someone who is dead or lazy. Because, as it turns out, the only investors better than women are people who don’t do anything at all. According to another Fidelity investment study conducted in 2014, the best-performing individual investment accounts, on average, were in dormant — or deceased — accounts.
If you’re looking to find success in this topsy-turvy economy, take some advice from the top entrepreneurs and venture capitalists. Invest in people. Even better, make sure those people are women. You’ll find that on average you’ll have better returns. Thank me later.
This article was originally published by Inc Dec 6, 2022.