Reason #3 of 52 to invest in venture

It’s 2024, and Doriot Venture Labs is posting one reason each week why everyone should invest in venture. Below is reason #3 of 52.

In today's fast-paced world, where instant gratification reigns supreme, there's a strong tendency to either avoid investing altogether or to gravitate towards strategies promising immediate returns. The behavior observed around Meme Stocks and Crypto during the pandemic is a testament to this trend. Most often, those who try to time their entry into hot markets—including venture—end up suffering losses.

While we all wish wealth creation were as simple as a mix of 'high returns' and 'high liquidity,' the reality is far more complex. A glance at the Fortune 1000 list reveals a telling pattern: nearly everyone on it is either a Founder or a Long-term Investor. Essentially, those who amass wealth typically possess an 'Owner's Mentality.'

What exactly is an Owner's Mentality? It's quite literal in its meaning. It involves purchasing and holding onto assets for as long as it takes for them to mature and appreciate in value before exiting the position. This duration could be as short as a few years or as long as a few decades. To excel as a startup investor, embracing this mindset of ownership is essential. Venture investing is not a game for gamblers or speculators, but for prospectors.

As an Owner, you’re always on the lookout for opportunities to own equity in a great Entrepreneur and/or Team committed to building something significant for the world. The more companies in which you have ownership, the higher the likelihood of generating positive returns and achieving “big hit” outcomes (i.e., 100x).

There’s an old saying: 'A fool and his money are soon parted.' This applies to those who choose not to invest due to risk aversion, allowing inflation to erode their savings until nothing is left, and to those who try to time the markets. The market often crushes both mentalities.

What the market cannot crush is someone with an Owner’s Mentality. A buyer, not a seller. This is what startup investing teaches: how to be an owner. In startups, you’re buying a Call Option on a future outsized outcome. By continuing to accumulate enough of these call options and, given historical patterns in venture, you stand a strong chance of amassing wealth.

For those interesting in beginning your startup investment journey, sign up for Doriot Venture Club, our free Venture 3.0 newsletter. We’ll teach you how to make strategic, small-scale investments in promising ventures.