Monitoring and Managing a Portfolio of Direct Investments

Richard C. Wilson narrates an educational video about monitoring and managing private company direct investments for a family office.

Richard C. Wilson explains how a family office can approach a portfolio of direct investments in private companies. He frames the work as two linked responsibilities, following how investments are progressing and helping improve their performance. The video lays out ways to evaluate company progress, work with founders and manage the portfolio over time.

In this video: Richard C. Wilson (Narrator)

What they said

1. Richard on value based milestones. Richard says a company's progress can be measured against factors that create value, including revenue, profit, product development, patents, customers and partnerships. He recommends setting milestones that fit the intended financing or acquisition path. (at 3:17)
2. Richard on monthly company meetings. Richard says consistent meetings at least once a month can help keep entrepreneurs focused. He cites research suggesting frequent monitoring and management led to higher returns than meeting once or twice a year. (at 7:31)
3. Richard on changing business plans. Richard says markets and product developments can change a business's direction, so investors should keep a patient view. He says investors can offer mentoring and professional connections to find management talent, key employees, customers or potential acquirers. (at 4:40)
4. Richard on companies that stop growing. If a company isn't growing as expected, Richard says an investor can mentally write it off and stop committing more time and money. That frees capacity for portfolio companies still on track and growing. (at 5:38)
5. Richard on diversification within a vertical. Richard recommends diversification across industry segments, investment terms, development stages and market approaches. He says this can reduce market risk and support an attractive portfolio return even when some investments fail. (at 6:06)

In their words

"you can't day trade Angel Investments"

Why it matters if you are building or preserving great wealth

Richard's example of an entrepreneur chasing revenue down a rabbit hole gives a concrete question for a monthly meeting: is a new opportunity pulling the company away from its long term goal? That can help an investor spot when a short term win may use time the founder needs for the company's chosen direction.