Advice for Kellogg’s Aspiring Venture Capitalists
Speaking before a packed room at Kellogg School of Management recently, CEO of Equilibrium Capital Group David Chen (’84) advised aspiring venture capitalists to roll with the current economic situation and adapt to changing times by following the money. “Over the next four to five years, government [spending] is going to play a huge role in our lives,” says Chen. “Where that money lands, there will be huge growth opportunities.”
Chen serves on the board of the Federal Reserve Bank of San Francisco’s Portland Branch, and Kellogg invited him to give his take on the direction of the economy over the next 24 months, with respect to the role of the Federal Reserve and the evolution of private equity.
The takeaway from Chen’s stop at Kellogg:
- It’s a hard time to be a banker right now. Congress says banks have a moral, patriotic obligation to loan money at a time when they are struggling to increase their cash reserves.
- Recovery within twelve months? Scrap that. We’re on this ride for the next four to six years.
- Want to score in venture capital? Forget Silicon Valley and head to China or India instead. “Only in markets where inefficiencies of capital and information co-exist with underlying growth can someone expect to make above-market returns,” Chen says.
- Act on your own conclusions and take educated risks when it comes to business opportunities.
Sustainability-focused ventures such as president Barak Obama’s green energy initiatives are where it’s at right now, says Chen. “There’s a massive amount of innovation taking place. The old rules are being rewritten and the new players don’t know what the rules are yet. Right now it’s a great place to be.”
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