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Today we’re joined by an exceptional guest, Mike Collins, the founder of Alumni Ventures and a true veteran of venture capital. With a career that began in the mid-1980s and has spanned decades of technological evolution, Mike has backed some of the most transformative companies in the tech world and has helped Alumni Ventures grow into a top 20 VC firm, managing billions and making venture investing accessible to thousands of individuals.
But this episode isn’t just about track records and accolades—it’s about demystifying one of the most misunderstood corners of wealth building: venture capital. Dave sits down with Mike to unpack exactly what venture capital is (and how it differs from private equity), why it’s typically been the domain of institutions, and how everyday investors can start to approach it strategically in their own portfolios.
Throughout the conversation, Mike shares valuable insights into the unique risks and high-reward dynamics of this asset class. He explains how proper diversification, access to tier-one deals, and a disciplined long-term approach can offer the opportunity for life-changing returns—while also emphasizing the need to understand the game you’re playing and the importance of patience.
Whether you’re new to venture or just looking to deepen your grasp, this episode serves as a practical guide to thinking about venture capital as part of a modern, well-constructed wealth strategy.
In This Episode
- What venture capital is, and how it differs from private equity
- How to strategically allocate and diversify venture investments
- The importance of access to top-tier deals and due diligence
- Building a long-term mindset and portfolio for outsized returns
I think you’re paying for illiquidity, and I think one should be thinking in the teens as it’s worth me tying up money illiquid for a period of time. But I think again, keen returns compounded over time, and you do really, really well.
Hey, everyone. Welcome back to Wealth Strategy Secrets of the Ultra Wealthy. Today we’re diving into one of the most misunderstood but potentially powerful asset classes in building long-term wealth, venture capital. My guest is Mike Collins of Alumni Ventures, a seasoned investor with decades of experience backing some of the most transformative technology companies. In this episode, we break down what venture capital actually is, how it differs from private equity, and why it’s traditionally been reserved for institutions. We also unpack how to think about venture within your own portfolio, from proper allocation and diversification to the reality of proper low returns where a few big winners drive the majority of outcomes. And most importantly, how to approach this space strategically. So you’re investing, not speculating.
Mike, welcome to the show.
Thanks, Dave. Great to be here.
Yeah, it’s a pleasure to have you on the show today and really talk about something really that’s quite fascinating and really not talked about too much in one’s portfolio, and that is venture. You have certainly had quite a background in venture investing for a number of years, and you know, especially in these days, we’re watching. I think we’ve seen now the latest two-person company that’s a billionaire, a $1.8 billion valuation, you know, based upon AI, which is just super exciting, and I think, you know, completely the early stages of what’s possible in this day and age with technology and AI and where that’s going. So why don’t we kick off the discussion, Mike, with a little bit about your journey and how you got to where you are today?
Yeah, so I’ve been in the venture industry, and before we get started, I just, you know, I think it’s really an important distinction to describe what venture capital is because it can sometimes be confused with private equity. You know, venture capital, which is the space that, you know, I’ve grown up in and Alumni Ventures participates in, is really about technology and growth. And you make money by investing when the company is small and it increases in value. You’re backing an entrepreneur, and you’re building something, and it’s a hit business. It is very much, you know, there is a pretty high failure rate, but the winners pay for the losers. Is the whole idea that this is an opportunity where you can make, if you get it right and you get in early, where you can make 5, 20, or 100 times your money? Private equity is really more about an established business concept and using debt, and it’s about efficiency. And, you know, sometimes you’re rolling up a bunch of relatively boring, low-tech businesses.
So I’m not saying that’s a bad category or that I just want to. You hear the word private and you hear the word equity and it’s sometimes. And I see this all in, like, you know, the media and on television, people kind of convoluting venture capital and private equity. Yeah, yeah. And I got my start at a venture firm in 1986. So, you know, I’ve seen a lot of the big technology disruptions of, you know, the personal computer and moving into the cloud and, you know, genetic engineering and, you know, the personal phone being a computer in your pocket. And now AI. So Alumni Ventures, I created it; it’s a business I started, you know, 15 years ago.
We cater to individual investors, you know, and family offices with a basic idea that we just think it’s a really important asset class. It’s an asset class that was designed really for institutions like endowments and pension funds. And I just personally found it really hard when I was not at a venture fund to get the quality of the deals and the quantity of the deals that you really want to have as an individual investor. So that’s what we’ve set out to do at Alumni Ventures, and now we’re coming up on a couple of billion dollars. And you know, we have 130 employees, and we have offices in Menlo, New York, Boston, Chicago, Tokyo, and London. We’re ranked by several publications as a top 20 VC firm. And you know, we really tried to do a good job of, you know, letting more people have access, you know, to companies like Rock or Aura or Circle or, you know, one of a thousand other portfolio companies that we’ve invested in over the years.
Yeah, makes sense. And just to kind of break that down for investors, kind of. When we’ve talked about portfolio allocation, we like to look at it on a pyramid-type basis, if you can think about that construct. Whereas the base of your pyramid should be capital preservation focused on liquidity and tax efficiency. Right. So things that are the lowest amount of risk. Right. And as you move up that stack in that pyramid, you have an increasing amount of risk, but you also have an increasing amount of return.
Right. So we see private equity pretty much kind of in the middle of that stack. You’ve got global equities and then you’ve got your venture. I would place that really towards the top of that pyramid. Right. Where you can have really outsized returns, as you mentioned. But you know what? What would you say, Mike, is a typical portfolio? About 80% are losers, but then 20% are winners? Is it about that type?
Yeah. So again, the only thing I would, I think your framework is great. I think obviously that the shape of that pyramid may change given where you are in life.
Sure.
You know, that kind of thing. You know, as you get older, it can be more about capital preservation. When you’re younger and building, it’s more about growth. I think, I think you’d agree with that. I would also say within the venture bucket, I think there’s always value in really all levels of your portfolio management, that diversification is your friend. And that is true, I think, within a particular segment like public equities. And that’s why a lot of people, the foundation of their public equities, is some kind of ETF or a large basket. But you should think about that also within the venture that it’s like if you’re just doing one venture deal a year, I would view that more in kind of gambling the gambling bucket than I would the investing bucket. That, you know, as you point out, Dave, a portfolio of like 20 venture investments, which I would view kind of as the minimum that you want to consider.
You know, you’re going to have 10 not do well, you know, and, and these are even if you’re investing in what I would call tier 1 VC deals, which are what AV does exclusively—deals led by big brand-name VC firms like Sequoia and Andreessen and Google Ventures and Benchmark. Not the local startup guy raising a little money for his business. I’m not putting that down. But that’s not Tier 1 VC. But even within Tier 1 VC, the most sophisticated investors in the world build large, diversified portfolios because they know half of them aren’t going to make it. Maybe a quarter of them are going to do okay, return capital, and maybe make or lose a little bit of money. But it’s probably 10 to 25% of the portfolio. It’s a handful of those 20 companies that earn 10x20x50x that make it a great investment.
And, frankly again, I think if you kind of get, if you go a level down deeper into some of the great investors of even public equities of all time, the Warren Buffetts of the world. If you were to, if you really dig into Warren’s return, it’s not, he hit 80% of them right. He also had a power law result. He had 10% of investments provide 90% of the return. And, and plus, you know, obviously Berkshire Hathaway and Warren had the benefit of time, which is one of the other seven wonders of the world, which is the compounding over time of a long career. Right. 95% of his wealth he created after the age of 65. So it’s like, you know, Dave, these are time-proven strategies.
Diversify, invest with quality people, have an adequately sized portfolio, and let time be your friend. Don’t day trade. So in venture capital, you know, those rules still apply that, you know, we try to invest with tier one people, we try to encourage all of our investors to have a portfolio of at least 25 to 50 companies, ideally even more that they don’t time the market. These are the habits that you want to build, which is if you have a quarter of a million dollars for venture capital, an allocation like that, don’t do it all in one deal, don’t do it even all in one year. You want to put money to work in a lot of companies over a period of time because there are good vintages and bad vintages in every asset class. And so it’s not sexy, but it’s like get rich slowly. And venture capital, we just strongly believe, deserves an allocation within that wealth, well-diversified portfolio. It’s the same thing that the richest people, the most successful investors in the world, do.
Family offices, you know, the endowments of the big schools, you know, they’re not putting 90% of their money into venture capital. They have that kind of pyramid you described, but every year they’re putting 5 or 10% of their capital into venture capital. It just, it makes sense.
The real edge in investing isn’t intelligence, it’s discipline and time.
Yeah. So let’s break that down a little bit further, Mike. And can we start actually at the 30,000-foot level and really identify first? So just think about people who may have never had exposure to venture before. Right. So who would this actually be a fit for? Right. What could be some typical percentages again for a portfolio to invest, and then, you know, go into that strategy a little bit more about how you would allocate, what sectors you might allocate to, and how you would think about actually deploying that capital.
No, that’s great. So I think venture capital is a fit for anyone that has a large enough portfolio that they’re considering things beyond the next year or two. Right. So this is not for capital that you might need. Right. So you know, again, in your pyramid, it’s like, “Here’s my operating expenses for the year, cash.” I need available emergency money. If you’re at that level, you know, venture capital should not be in your mix.
But if you’re thinking about building wealth for the long term, if you’re putting money away every month in IRAs or retirement accounts, I think an allocation of 5 or 10% of your portfolio is kind of middle of the fairway advice. Some people are more aggressive, some people are more conservative, and some people are at the capital preservation part of their life. And a lot of our customers and we have, you know, kind of come up on 15,000 individual investors; some of them are on that capital preservation side of life, but they’re really trying to grow things for their kids or their trusts or their charities. And so they allocate that money into these more growth-oriented strategies where you’re really interested in kind of building things over a long period of time. And then within, say, a 10% allocation, as I mentioned, you want to think about dividing what you’re investing in into kind of, I would say, a four-year chunk to get good time diversification as well. So you might think about like 2.5% of your portfolio a year for the next four years. And then you really want to build a portfolio of 100 companies, right? 25 companies a year. So you want to go into a well-diversified fund that is going to invest in 20 to 30 companies per year.
That’s really kind of a very middle-of-the-road way to do it. I will give you the pro tip: the returns that you get by co-investing with the very best VCs are going to do a lot better than the kind of middle-of-the-road venture capital firms. And that is not because the people that work at Andreessen or Sequoia are smarter than other people. It’s that if you are running a really great venture, you’re an entrepreneur who is crushing it. You have your choice of venture funds that want to invest in you. So it’s really more a correlation that you want to use as opposed to that they’re better or smarter than other people. It’s a little bit like sports. If you’re the best high school basketball player in the country, you’re picking the college that you want; they all want you.
So it’s more like, if you are that kind of entrepreneur with that kind of business, you’re going to make your way to tier one VCs. So this is one of the challenges for individual investors. Even if you’re a family office, you’re not getting into that deal. Frankly, you know, you’ve got three tier one VCs fighting for allocation to lead the A round. Why do they want to deal with this individual? The money is not the problem, right? It’s competitive. So you know, this is the secret sauce of Alumni Ventures: by pooling people’s money together and the power of our network, we’re able to go to the entrepreneur and say, “Hey, you’re raising money from NEA, and they’re leading your A round.” We want to do 10% of it, and we’re not going to renegotiate the deal. We’re going to do the same terms and conditions.
But we have this incredibly powerful network of individuals and corporations and a global footprint that can help you expand, that can help you raise rounds of money, and that we have the best Rolodex in the business. At the end of the day, that’s how we can get into the same deals that the very best VCs in the world get into and lead. So that’s our story.
So if we take your scenario of deploying, say, 250k to 500k over, say, a 4-year span, right? Are investors actually looking at each individual deal? If you were deploying for 25 different companies over that year, are they actually doing diligence on each one, or are they accessing one of your fund vehicles?
Most of our investors actually do a blend. So they’ll say, you know, I want a portfolio of 100 companies over the next four years. And like you said, a good scenario is kind of 250k a year. And they’re going to say, you know, I’m going to put 150k of that into a diversified fund, and I know I’m covered, and I’m building a portfolio, but I want to learn and have fun and have an ability to kind of lean in. So many of our investors also like being part of. And when you invest in one of our funds, we also will show you a deal a month that we’re also doing, and you can never do that, or you can do a couple a year. But our investors love the option of looking at some individual deals and putting a little more money to work in a particular deal if they want. And what we do there is we make our due diligence available; we do a deal discussion.
You know, we think it’s part of our mission to help educate people. Venture capital should be interesting and fun, and it’s, again, like public equity. I think people, a lot of people I know, enjoy owning a few individual names that they, you know, really love in this particular industry. I really like this particular company. I, you know, I’m, yes, I’m going to cover my bases by owning, you know, a diversified basket of the S&P. I’m going to maybe own an international fund or two. But you know what? I just want to own some Nvidia stock, or I’ve always been a believer in, you know, Shopify. So I want to, you know, I want to own that individual name.
The same thing is true in venture capital. With our customers. We encourage them to be sure that they don’t just have a few names, but they have this big, diversified portfolio. But we think education is part of our mission yet, and ventures should be fun and interesting. And we have people that really want to invest in energy; we have people that want to invest in healthcare. So we have those kinds of analogous products available just like for a public equity portfolio.
In line with Warren Buffett’s thinking, one of his rules is never invest in something you don’t understand. So if you’re deploying capital across 25 different companies within a given year, how do investors really understand, you know, the different business models?
You know, I think this is one of the areas that I think I would diverge from Warren on because I think at the end of the day Warren really looks at moats like brands. Like, you know, he’s been a believer in Coca-Cola, right, which has one of the great franchises of all time. But could Warren operate that Coca-Cola business? I don’t think so. Right. So I do think it’s like, I guess I take issue with trying to know something well enough to make a good investment decision. I think, I think what I would say is you want to do due diligence. And for us in the venture industry, due diligence is related to a lot of it going into evaluating the founder and the founding team. Right. The success of SpaceX is largely driven by Elon Musk.
So you’re evaluating the person and their ability to build a world-changing company. Right. I am not going to evaluate his rocket technology as an investor in the same way I’m not going to as a public stock investor go and evaluate Nvidia’s chip hierarchy. Right. I can evaluate the due diligence that we do on, hey, what’s the problem here? What’s their idea of solving the problem? What is the background of the people? What traction have they achieved? What is the valuation that the company is raising money at? I think those are good general business skills that everyone should have in making any investment decision, right? Whether that’s buying your home, whether that’s buying a particular stock, or any kind of investment, I think there’s the right kind of due diligence to do. And this is one thing we do when we do and share our due diligence with our investors: we do it in kind of an open-book way, which is, you know, just to pick. One of our.
One of our portfolio companies is a company called Sleeper. And this was a deal that we did back in, I don’t know, 2017, where it was five people, and the business has grown and evolved and is now one of the leading fantasy sports applications. And when we did that deal, we were investing in them and the team and their idea that they really felt that the world of kind of fantasy sports was taking off and that that was going to create huge opportunities, and they had a really good technology background, and they had a vision of what they wanted to offer customers. But at the end of the day that was the decision. It wasn’t. I knew how to run Sleeper better than that team, and I didn’t come from fantasy sports, obviously. So that’s how we view kind of due diligence and making investment decisions. And again with the humility of all investing.
You don’t know.
Sure. Mike, many of our investors listening to this right now are very interested in tax-efficient investments. Do any of your platform companies have any tax efficiency associated with them?
Well, again, one nice thing about venture capital is it’s in the capital gains bucket of the world. So you do have kind of the long-term capital gains aspect of it. There’s also something called QBS, which is a part of the tax code, but you and I won’t go down into this tax rabbit hole. But it’s basically the ability to invest in a technology company with certain criteria of holding, period, and the size of the company, etc. Which is some of that can be tax-free if it’s rolled over correctly. So people can go Google that particular aspect of the tax code. But generally tech investing is pretty favorable from a tax perspective. I would also say a lot of our investors invest in venture capital through retirement vehicles because, you know, you’re kind of marrying the time horizon of venture capital, which is not day trading; it is long-term capital appreciation.
You know, you invest in a dollar and hope to pull out a hundred seven years from now. That is kind of the way psychologically a lot of people think of their retirement money, I guess. And I would leave it as it is, you know, if you make a hundred times your money, shut up and pay your taxes and quit bitching about tax rates, you know, you’re kind of losing. You know, focus on tax efficiency for the bottom of the pyramid. This is, you’re looking to make life-changing investments. Yeah. You know, worrying about this isn’t the part of your portfolio where that should be. You know, get into the next Airbnb at the seed round and worrying about taxes later is really how I would view it.
And it’s just, you know, I am super tax efficient myself with my family office. When I’m dealing with the capital preservation side of it, when it’s the growth side of the equation, I’m a lot less. I don’t want to miss a deal because it’s not tax efficient. That’s pennywise and pound foolish.
That’s fair. Let me ask you something. If you’re earning multiple six figures, maybe even seven, do you ever feel like you’re doing all the right things but your wealth still feels fragile, like it’s dependent on the market, your taxes are still way too high, and you don’t have the level of control you actually want? Because here’s the truth. Most high-income professionals are following a wealth strategy that was never actually designed for them. It was designed for Wall Street, not for building real controllable cash-flowing wealth. And the problem is you don’t realize it until it has cost you years or even decades. That’s exactly why I just put together a private 25-minute masterclass called the Contrarian Wealth Blueprint, where I break down the invisible structural mistakes I see in high earners and how sophisticated investors actually build wealth differently. This is not about chasing higher returns.
It’s about building a system that gives you more control, more liquidity, and significantly better tax efficiency. If that resonates with you, go to contrarianwealthbuilder.com and reserve access. It’s quick, it’s free, and it may completely change how you look at your wealth strategy. So if people were thinking about, you know, getting into venture, right, what would be some typical steps for someone who’s new, who has never really invested in it before? How should they approach this?
If your wealth feels fragile, it’s not a return problem, it’s a structural problem.
So do your research. I would encourage you to kind of check out AV because, poke around. I would attend one of our webinars where we’re looking, you know, we do things where we’re like, “Hey, here’s a deal we just did or we’re about to do,” and we get together and kind of go through it. What did we like about it? What could go right, what could go wrong? Talk to us. You know, we have people that, you know, want to listen and hear about kind of where you are in your journey. We have customers who have been doing this for 30 years, and they just like our deal flow, and they want to kind of put money in a particular fund or look at individual deals. And we have people where they’re, this is brand new, they’re venture curious. And so we’re a great place to learn and, you know, kind of dip your toe in the water by doing a few individual deals, putting your money into, you know, a small amount of money into one well-diversified fund.
I mean our minimums are pretty small. So I mean, you know, it’s literally like you have a portfolio or 20 or 30 ventures, and it’s like you have a thousand or so dollars in each deal. It’s not going crazy. And this is again, you know, the perception of venture is, it’s risky. It’s risky if you put a lot of money into one deal. You know, it is a lot less risky if you have a portfolio of a hundred companies all led by Tier 1 VCs and you have a couple of thousand dollars of work at any one name. So I do think, you know, it’s, it’s, you just want to think about doing it the right way. And if you do it the right way, you know, I think it’s, it’s, it’s no less risky than putting a lot of money into one particular name of a public company, frankly.
And this is especially true too, Dave, which I think, you know, in 2026, we’re, you know, we’re looking at some potential major disruptions going on because of AI, because of what most really smart money is thinking is going to be a change in health, tech, education, transportation, and defense. You know, these industries, you know, you know, we’re even seeing this in an area of the economy like defense tech. Right. You know, the old names are like, oh, I’m going to invest in the big tech companies, you know, the Boeings and the Martin Mariettas and the Raytheons of the world. Well, you know, we’re seeing modern warfare is not battleships and aircraft carriers; it’s drones, and it’s AI tech, and it’s cyber warfare, and you know, the disruption brought to you by this new generation of, you know, the Andrews of the world, these tech-forward companies that are coming out of Silicon Valley. But we’re just seeing it really across the board where, you know, I think venture capital can be thought of as an offensive play. But I think one has to think very carefully about defense when it comes to, you know, the things that you thought were safe and forever, you know, may not be less safe and less forever. And that, I think, is for companies and societies, but also individuals and their own careers. I mean, I think we’ve all seen it in the disruption of podcasts taking over for where people are spending their time in getting their news and learning.
You know, podcasts have disrupted, you know, radio and broadcast TV. Now is not where young people are spending their time. You know, and so I do think you want to, even if you have a capital preservation mindset in a phase of life. I think a little bit of exposure to technology these days is almost an insurance policy because, you know, things change.
How should people be thinking about just, just, just a generalized return structure, right? Going into venture, right? If you were deployed across 100 different companies right over that four- or five-year time frame, how are people supposed to think?
And I want, yeah, no, listen, I think you’re paying for illiquidity, right? And I think one should be thinking in the teens as it’s worth me tying up money illiquid for a period of time. But I think again, teen returns compounded over time. You do really, really well. And so you can have a great year in the public markets and get those kinds of returns, but you can also, there, you know, for those of us that have been around, there’s, there’s also bad years in the public market. So it’s, it’s, it’s the same thing here. I think it’s again, one should think of this as equities. I want to own public equities that are a little safer and a little more established, and I want to treat them as a portfolio. And I want private equities, which are a little less efficient.
There’s a higher failure rate, but I’m paid for that in liquidity. And the fact that I have to understand that some of my individual names within a fund will be failures, but I paid for that because the winners, the winners really win. When you’re into a really great company, you know, you’re looking at 10 baggers, 20 baggers, 50 baggers, and even more, so that’s how you should think about it.
Mike, if you could give just one piece of advice to our audience about how they could accelerate their own wealth trajectory, what would it be?
I think you want to invest in things that you don’t look at every day. I mean, I think there is an incredible propensity in today’s society to look at your phone, and if you’re looking at your phone for your investments, you’re gambling; you’re not investing. So I, and I think this is true for frankly all categories of your portfolio. You should be thinking about things in the quarter in terms of quarters and years and decades. So I think there is, listen, all investing, Dave, is really a form of arbitrage, right? And I think there’s, I think, the biggest arbitrage. It’s a very insightful question; it’s actually time arbitrage and attention arbitrage. So much of our world today is what’s happening in the Iran conflict today. And you know, what’s the yen carry trade, and how did this stock have a quarter? You know, I don’t think that’s healthy.
I don’t think that’s the way you build wealth. I think you want to invest in things that you don’t have to look at and day trade. If I were to give kind of one lesson from doing this for 35 years, I think there’s huge value to be created. If you can tune out the day-to-day and think about things that you’re not charting on a day-to-day basis, you do a lot better over time.
Sage advice, Mike. Really appreciate your time and insights today. If people would like to learn more about you, where is the best place they can connect?
Yeah, just really simple; go to AV BC; really easy to do things. We have a learning section, we have webinars, and we make it really easy to talk to one of us. It’s very. Listen, we’re all in a different place in life. We all have a different set of financial goals. We all have a different discretionary budget. You really want a venture partner to help you navigate your personal plan. And so that’s how we work with people.
We’re designed to deal with individuals. So give us a call and talk to us. We’re here to listen.
Sounds great, Mike. Again, I really appreciate it, and we’ll talk soon. Thank you.
Excellent. Thank you, Dave.
Thanks for listening to this episode of Wealth Strategy Secrets. If you’d like to get a free copy of the book, go to holisticwealthstrategy.com; that’s holisticwealthstrategy.com. If you’d like to learn more about upcoming opportunities at Pantheon, please visit pantheoninvest.com. That’s pantheoninvest.com.