Pennies & Train Tracks

I was speaking with one of Energize’s Limited Partners this week. For the VC newbies, LPs are the groups (endowments, family offices, corporates) that actually give our Fund our capital.

Here at Energize we have a number of very experienced family office investors as part of our LP base. I consider myself fortunate that I get to speak with and learn from these individuals. Yesterday I was speaking with one of those LPs and talking about the current market. They had this great quote:

“Don’t pick up pennies off a hi-speed train track.

The individual was referring to the current volatility of the market and how the reward to the upside given the risk in-market seems imbalanced. And that a lot of investors are making risky investments with great economic uncertainty hurtling towards the market. In the conversation that followed we covered how the individual dealt with these events in the past. The advice was to be more of an observer vs participant and keep cash liquidity high because the right events will come… and when they come make sure the reward for the risk is FAR greater than the pennies.

As an early stage investment group, the Energize team has seen this froth and been slightly less active the past 6 months. During this time we doubled down on our research process. We are focusing on “where the puck is going” and have been heads down on about a half dozen deep dives. I am pretty excited about what we are uncovering… and those deep dives are revealing great investment opportunities that are less covered in the current market and better balance the risk/return that expect.