Diversification has always been a fundamental investment principle, and in 2018 it remained an important strategy for venture capital firms seeking to balance risk across their portfolios.
Because startup investing carries inherent uncertainty, spreading investments across multiple sectors and stages helps reduce overall exposure.
Managing Investment Risk
Rather than concentrating capital in a single industry, many venture capital firms invest across:
- Enterprise software
- FinTech
- Healthcare
- Artificial intelligence
- Consumer technology
- Climate innovation
Diversification helps ensure that the performance of one investment does not determine the success of the entire fund.
Geographic Expansion
Many firms are also investing across multiple regions, recognising that innovation is taking place well beyond traditional technology hubs.
International diversification allows investors to access new talent and emerging markets.
Looking Ahead
As startup ecosystems continue expanding globally, diversified investment strategies are expected to remain an important part of successful venture capital management.