3 ms·

Decorrelation is a matter of degree, not a binary. VC funds are less tightly correlated with, say, the oil industry than the chemical industry is.

• manishsharan 9y ago
  (I am not a finance guy so pardon my dumb question ) How do do startups serve decorrelation of fund portfolio? Startups valuation has to have some degree of correlation to the industry they serve. By this I am supposing that if you have a healthcare startup, its valuation would be strongly related to the performance of the healthcare sector. So if you have say healthcare stocks in your funds' portfolio, would investing in a healthcare startup serve decorrelation ?
  • closeparen 9y ago
    That is why you invest in a VC who invests in a number of startups in different industries.
  • georgeecollins 9y ago
    Startups often don't correlate very well with the industry they are in because they usually don't have the same business model. So I don't think Uber correlates with to transportation stocks, or Air BnB correlates to resorts, or 23 me correlates to Pharma etc. There is a cycle to start ups, but it is related to the broader economic outlook and the price of capital.