Don’t Be a Lemming

In these recent troubled economic times, it is regrettable that investors find it easier to act like lemmings. Financial lemmings buy when the pundits write that the markets are robust; they sell when the pundits cry doom; they fail to examine the fundamentals of companies.

The venture community is blamed for the woes of today’s investment market and today’s economy, according to many publications. Christopher Whalen’s “The Long Good-Bye”, in the March 19 Barron’s, is a representative sample of many espousing this view, which seems overly simplistic. Rather, a forgiving public investment market encouraged growth and momentum investing by most investors, both public and private, hedge fund managers, buyout funds, and to be sure, venture firms. Most people enjoyed the period of irrational exuberance, if not the unpleasant aftermath.

Today, the global economy is intertwined and so are the financial markets. To place blame on any one sector is an error. Rather than attempting to ascribe blame, let’s resolve to create solutions so that we can move on with building a better tomorrow. Let’s exercise the power of our precious individual craniums rather than be lemmings.

We all need to help get this economy and the financial markets back in order. We can return to fundamental investment basics by requiring sound value propositions from early-stage enterprises and mature companies. Investors can thus regain confidence in the investment markets.

Technology has been the leading component of economic growth within our Gross Domestic Product for the past few decades and, certainly will be for the next few. Technology has led to the strength of the US economy, our dollar as well as our dominance of global commerce. Yet, we must recall that the technology sector suffers cyclical downturns as do other industrial sectors.

As a venture firm, Sensei Partners’ mission is to build sound technology enterprises with strong value propositions. Sound value propositions incorporate sustainable business models that enhance the probability for success and commensurate generous rewards to investors for their risk-taking and support.

Don’t be a lemming… as independent thinkers we should know that the opportunity and merits for investing in technology have not been lost.

Patrick Yam is the Dean’s Executive Professor of Entrepreneurism at Santa Clara University’s MBA program. He is the founder of Sensei Partners LLC, .http://www.senseipartners.com,/, a venture investment enterprise located in Menlo Park, California.