In conjunction with our Q4 Venture Financing Report, Lauren Creel sat down with Sean Barrett of HMI Capital to get his take on the state of venture capital investing.

Key Insights

On going back to basics this year: “HMI made its first investment in early 2009. … Everything was for sale, and the experience taught us some important lessons – prioritize the best ideas and then invest in those with conviction, focus on high-quality businesses that can compound through cycles, and think about investing outcomes as probabilistic rather than single pathways.”

On a robust deal environment: “Q4 was the most active quarter we have seen in years. We believe the fourth quarter generally had more deal flow than usual due to political uncertainty and high valuations, coupled with lots of capital, making for a good supply-demand setup.”

On putting money to work right now: “We’ve been selective, focusing on great companies that can grow for a decade or more. The base rate for decade+ compounders is not amazing, but if you can find them, your entry valuation doesn’t matter so much. If you’re wrong, it’s a different story.” 

Read Full Commentary from Sean Barrett

Posted by Cooley