Facts, Not Myths

Rethink Investment Strategy

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Replace myth with reality

Among investors and capital allocators, there is a professional pride in making rational, evidence-based decisions. As there should be. However, among human beings, there is a powerful contradictory preference for beliefs and habits that conform to group norms. Too often when conventional wisdom is contradicted by facts, conventional wisdom prevails.

For example, when otherwise sophisticated investors and capital allocators say without apparent self-awareness, “we are the smartest people in the room,” “we are experts in finding the next new thing,” “we are killing each other for deals,” “we’d love to invest in a female or Black founder but we can’t find any,” and “venture capital is a meritocracy.”

In private market investing — from early stage angel through venture capital and late-stage private equity — these statements routinely draw nearly reflexive nods of agreement because widely held, deeply rooted myths have defied rational fact-based examination. Here's our list of the Top 6 Myths Perpetuating Hyperconcentrated Portfolios.

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These myths are not harmless. They cause direct investors and LPs to suboptimize returns, carry undue risk, and sow economic and social ills.

However, even the most stubborn counterfactual beliefs are not immutable — minds and investment policies can be changed. And truing up with reality has distinct advantages.

Financial advantages aside, investing for inclusion also happens to be both the intellectually honest and ethically right thing to do.

We have data

Investors and allocators reluctant to invest for better often object, “we don’t have enough data.” The truth is there is never enough data to convince someone of a reality they don’t want to accept.

But we have more than enough data to discredit homogeneous investment allocations, and to substantiate inclusive investing strategies.

There are many readily accessible and reputable data sources in the public domain. The Reinventure team has gathered a small subset here, which we update from time to time.

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