Make everything as simple as possible, but not any simpler

The life of an average Venture Capital fund is 14 years. With an average 14-year lifespan, you are likely to invest or hold portfolio companies through at least one major global crisis. How can we manage our personal decision making through a crisis?

Yes, most funds are structured as 10-year vehicles. However, statistics from HarbourVest and Adams Street, taken from thousands of funds, have shown that the average life of a fund, with extensions, ends up being 14 years — typically there is a tail of a few companies that need more time to realise their potential. With an average 14-year lifespan, you are likely to invest or hold portfolio companies through at least one major global crisis. And this does not consider the more localised disasters that I know many of you have experienced, such as the London tube bombings, the terrorist attack in Paris, the volcano eruption in Iceland, the Catalan independence movement, or the Erdogan regime change in Turkey. In the aggregate, we find ourselves in a regular cadence with pockets of local or national uncertainty, as well as subject to the bigger macro-cycle impacts such as the combination of the dotcom crash and 9/11 terrorist attacks in 2000–2002, the Global Financial Crisis (GFC) in 2008–2010, and now a global pandemic starting in 2020. The latter, by all accounts, is unprecedented in size and scale.

Uncertainty can trigger anxiety, confusion, fear, a feeling of loss of control, and a whole host of other “negative” emotions. In human evolution, the need to control our environment has enabled us to survive as a species. Being scared, alert, and expecting surprises when venturing into unknown territories has kept our species alive. No wonder that these emotions well up and can take hold of us in the present time.

How can we manage our decision making in these circumstances?

Trust your gut or intuition. Remember, opinions are many, insights are few. The more uncertainty there is, the more you should listen to your gut or intuition. In his book Risk Savvy: How to Make Good Decisions, Gerd Gigerenzer writes: