How I Invest with David Weisburd
E83: Tax Benefits of Investing in Venture Capital w/ Michael Schulman
Aug 6, 2024
Michael Schulman, Chief Investment Officer at Running Point Capital, shares his insights on the venture capital landscape. He discusses the importance of careful manager selection and the risks and benefits of investing with spinout managers. Schulman emphasizes the need for strong relationships with General Partners and delves into tax strategies before liquidity events. He also highlights the critical balance of quantitative and qualitative skills necessary for effective wealth management and successful investment communication.
21:17
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Quick takeaways
- Venture capital investments require patience and long-term planning, especially to leverage tax benefits like those from Qualified Small Business Stock (QSBS).
- Selecting the right venture capital manager involves thorough due diligence, focusing on expertise, track record, and qualitative assessments to align with investment goals.
Deep dives
The Nature of Venture Capital
Venture capital combines elements of investment and psychology, characterized by excitement and the need for patience. Investors often expect returns over an extended timeframe, typically ranging from five to twenty years, which can be challenging due to shorter attention spans. While family offices might manage much of their wealth in illiquid assets, they still need to take calculated risks with a preference for early-stage ventures due to potential tax benefits. Understanding the implications of Qualified Small Business Stock (QSBS) allows strategic planning regarding tax savings from capital gains tax when gains are realized.
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