Democratizing Venture Capital — Alumni Ventures CEO Mike Collins

Fred Schonenberg
Hello, everyone, and welcome to the VentureFuel Visionaries. I'm thrilled today to welcome Mike Collins. Mike is the CEO of Alumni Ventures, which is one of the most active venture firms in the world. Under Mike's leadership, Alumni Ventures has redefined what it means to invest in innovation. They've built a powerful model that connects accredited investors with professionally managed venture portfolios through shared communities, specifically with alumni networks. The mission is to democratize access to venture capital. 

Mike and his team have empowered thousands of investors to back groundbreaking startups, whether that's in AI or climate tech, to digital health and beyond. So today we're going to dig into how they built this, one of the fastest growing venture firms in the U.S., how community and access can unlock innovation at scale, and what the future of venture investing might look like in this rapidly changing world. 

So if you're an innovator, an entrepreneur, an investor looking to understand how to participate in the next wave of venture transformation, this is the episode for you. Mike, welcome to the show.

Mike Collins
Thank you, Fred. Great to be here.

Fred Schonenberg
All right. We got to start off with our basketball commentary right before this started. So if anyone's listening and not watching, my background has some basketball items in it, which Mike commented on, and I played basketball at Trinity College. Mike, you played at Dartmouth and had the honor of guarding someone people might know.

Mike Collins
Yeah, I mean, we were one of those post exam easy games for the North Carolina Tar Heels in 1983, which had a pretty good team featuring Jordan and Kenny Smith and the Doherty's and three Hall of Famers, basically. And yeah, they were a little tired from the exam period and decided to schedule Dartmouth. I got to cover MJ, who, you know, they beat us pretty handily. Let me leave it at that. 

But I do have a video clip that I love to share. But again, tube socks, Fred, and no, short shorts. And we all had more hair than I did. Then in 1983…

Fred Schonenberg
I can't believe this wasn't part of the last dance documentary with Jordan. This should have been the beginning.

Mike Collins
Yeah, I personally take credit for kind of setting him on his career. I was a huge confidence booster for sure. 

Fred Schonenberg
Well, I will tell you that my basketball career had a North Carolina turn. I wanted very much to go to Carolina because of Jordan. And I went to a basketball camp called Five Star Basketball. Big deal at the time.

Mike Collins
Big deal.

Fred Schonenberg
I… all of a sudden, the first person I saw at Five Star was Rashid Wallace, who later went to Carolina. And he was really cool. He asked me to go shoot with him. And we were shooting around and he was like, oh, you really can shoot. And I was like, yeah, yeah. He was dunking left and right, doing all these things. I was so scared. He was seven feet tall. He was just unbelievable. 

He goes, let's shoot, and he matched me shot for shot all around the court and it was pay phones back then. I called my mom from the pay phone and I said, the dream is dead. This is just a reality. There's a seven footer that can do everything I can do.

Mike Collins
Yeah. My camp counselor at Five Star was Doc Rivers. Yeah. And I go, I better study hard at college pretty quickly.

Fred Schonenberg
Oh, my God. Well, for anyone wondering what podcast they are listening to, I promise we're not going to go any further into our basketball careers. But Mike, can you tell us a little bit about yourself, your background and for anyone that's not familiar with Alumni Ventures?

Mike Collins
Yeah. Alumni Ventures is a company I started 11 years ago. So if you go really back in time, right after Dartmouth, I joined a venture capital firm called TA Associates back in 1986. And so really fortunate, a tremendous group of people there got exposed to the industry early. Big influence on my life. And then studied at Harvard Business School and met a guy named Clayton Christensen, who was also a huge influence on my life and how I think about technology and innovation.

My career has really been kind of at this intersection of technology and venture investing and entrepreneurship. And I think of myself a little more as an entrepreneur than a VC, but was able to bring those things together over a decade ago in forming Alumni Ventures. And like a lot of entrepreneurs, it was kind of from a personal experience that obviously I believe venture capital is super important.

That has become, I think, clear to everyone over time that it's really the engine of the world economy. And I found it really hard to get access to the very best deals when I was not in the business. So the simple idea is, you know, by joining forces, capital, expertise, networks, that a network approach could be better for everybody. 

And so started with my alma mater and, you know, now have communities around most of the major U.S. institutions. We get into great deals because of our Rolodex, our network. We really lean into this idea of bringing more people into this asset class. And we do a lot of education about our point of view on venture capital, how you put together a smart venture portfolio, the real importance of co-investing alongside tier 1 VCs, and understanding our role as a co-investor that we're not going to be on the board of. 

We're not going to price rounds, but we're going to really try to kind of fight above our weight class by being helpful to an entrepreneur because we have this enormous network of 15,000 investors and syndicate members. And literally one click away from an order of magnitude more people than that because of this approach, which is different from a lot of other VCs that lead the rounds of financing.

That's the story and we've built it now so we've invested and raised over a billion five. We invest in about 300 companies per year. Some of the companies that might be familiar with your audience were investors in Circle and in Grok, Lambda. You can go to our website and see… I'm going to leave out amazing companies, but it's a really strong portfolio. And again, we think the very simple proposition is to a retail investor, show me your venture portfolio. We'll show you ours and which kind of thing you would rather have. And so that's the core idea, Fred. 

Fred Schonenberg
Yeah. I love it. I think it is so smart. I first got exposed from the alumni side of it, from like that community of looking at a university and tying into that. Can you talk a little bit about that part of it and the model itself? I might want to dive into the community piece a little bit because I think it's really unique.

Mike Collins
Yeah. Obviously, where do you start building a network based venture capital firm? Well, there's so much in our society that bonds people together. As you know, we started the conversation about where you go to school. That's just part of our culture. If you're another Dartmouth alum or another Trinity alum, you're way more likely to pick up the phone and talk to somebody. So there's that bonding.

There's also an intersection of, boy, that's where a lot of great entrepreneurship happens. Obviously, the stories of Google and Metta, et cetera. We're coming out of the research, coming out of where people meet their business partners. It is just a natural nexus of entrepreneurship. And it's obviously one of the things that's made the U.S. technology seem so powerful is MIT and Stanford and Harvard and all of these incredible colleges, universities and alumni networks. 

So, the idea is we could invest together as fellow alums that would build trust, that would give us access to deals. I mean, getting into really the very best deals is competitive. And it's a lot easier to pick up the phone and reach out to a Yale founder if you're a Yale alum and say, this is who we are. We're a community of alumni, fellow alumni. But when you're an entrepreneur, sometimes dealing with hundreds of retail investors is not how you want to spend your day. So, you can kind of get the benefits of having this huge network but we come into a deal really as one check through an SPV and really operate as a venture capital firm.

So we kind of shield the entrepreneur from a particular alum trying to call up on a Thursday afternoon saying, how's your quarter going and bothering an entrepreneur? So, yeah. Then as we've expanded, we expanded to other alumni groups. And now we're really… we feel we have pretty good coverage on that.

And our second generation is really about expanding around areas of investing interest. Having an AI fund, having a blockchain fund, having a health tech fund is really part of our second act, as well as trying to take the AV story, Fred, globally. So obviously a U.S. network is great, but we just in the last six months opened up two new offices, one in Tokyo and one in Great Britain, because the vision I have for this network is a global network of individuals, portfolio companies, and business partners.

So we still have a long way to go in kind of fulfilling that mission. But our goal is there's a day where we're investing in an Israeli startup in cybersecurity, and they want to raise their A round in Silicon Valley, and they want business introductions in Asia. And the AV network helps facilitate all of that to create value for the entire ecosystem.

Fred Schonenberg
I love it. I would imagine early days, maybe you've worked through this with the model, but as a Trinity guy, I'd be very interested in investing in the Harvard alumni startups, maybe more than the Trinity ones, just getting all those Trinity listeners out there. But is it a circle? Is it like this is the... 

Mike Collins
No, it's a soft circle. So, people are… anybody really that's accredited is allowed into any of our funds. So, yes, we have a pretty significant percentage of the community, like our particularly popular ones are MIT and Stanford. The Harvard ecosystem is really strong entrepreneurially. Yeah, we do open it up. And a lot of our investors, we've tried to make this, Fred, as similar to owning public stocks as possible. So, you can go into more than one fund.

You can just do this deal by deal so people that are just looking to complement something they already have in their venture portfolio or maybe are new and just kind of want to go slow and dip their toe into venture investing. We facilitate, join our syndicate. It's free. And you start seeing the deals that we're actually doing and you get comfortable and you hear our people. As I mentioned, we do a lot of education where we're saying we just made this investment in this new nuclear company.

Here's why we did it. Here's the lead. Here are the risks. Here's the opportunities. You see how we think. And your listeners know that this stuff is only obvious in hindsight. But we go through our process in a very transparent way and then people get comfortable saying, boy, these people do the work. They get up every day. They're getting access to deals that I don't even hear about and it comes back to this. I think even more fundamental point, Fred, which is just this is such an important asset class, right?

And in one of the things I've seen, even in the last 10 years of building alumni ventures is. There's so much value now created privately. When I started out, companies like Apple would go public at a pretty reasonable valuation. And you could really wait for companies to go public and there'd still be enormous value accrued there. But now you have companies that are the first 50 billion of value. Value creation is done kind of in this private realm.

So I think that's a bit unfortunate, frankly, that more people aren't being able to invest in SpaceX or Stripe or Anduril or Grock or these kinds of companies. So we try to do our part in making it more accessible at the very least. But it's still… and a lot of people view this, oh, I just have to wait for the IPO window to open up. And I'm less convinced that it's not as open as it's going to be. Meaning, I think a lot of well-informed entrepreneurs are making the choice rationally to say I'd rather stay private. 

I can attract people, I can provide liquidity through secondaries and tender offers, and I can raise as much money as I need if the company is doing well in the private market. So why deal with the cost and the short term perspective? And frankly, just the headache of being a public company. So, I think this is true, the actual number of public companies is flat or shrinking year over year for the last few years because companies are going private. 

There's a lot of P.E. people. And just again, we do have companies go public, but just the net number is pretty small. So I almost think there's three markets now. There's public equity. There's venture capital, which is really about the emerging technology play, which is kind of a power law business. And then there's this late stage private.

Fred Schonenberg
Yeah.

Mike Collins
These companies that are clearly a product market fit, clearly have de-risked a lot of the layers of risk and have multi-billion dollar valuations. There's hundreds of them now that are just still private, that I'm calling kind of late stage private. So I almost think there's three markets and I think an ideal portfolio, and this is true of the most sophisticated capital is, they have allocations to all three buckets. 

Fred Schonenberg
Yeah. It's crazy how much that the venture capital bucket has evolved over the past 10 years. And I agree with you, there is that private equity bucket now that's evolving for the later stage too. I'm curious, you mentioned the power law, and I think most of our listeners understand that, but just if anyone isn't at a high level, it's the idea you make 10 investments. 

One of them is going to be your home run and that is going to carry the entire 10 investments. The other nine, two will do okay. And seven will go away is sort of the math there. When you're running such a large community, how do you help people understand that? Right? Because I know people that I'm friendly with, maybe not in this world, they're used to buying one stock that's going to do pretty well and they're going to watch it. And it's like, no, no, you have to get at the 10 here. And you got to roll and know that the first nine that aren't going to do well, you're going to find out about them before the one that does really well also.

Mike Collins
Yeah. I mean, there's a saying in venture capital, your lemons ripen early. Right. Which is this, there's a couple of different things that are really important to understand about venture capital. One, it is absolutely, as you said, described well, Fred, a power law. So, you have to be prepared to think about this as a portfolio.

Number two, I would say is how big of a portfolio do you really need in order to get the math to work right? And it's not doing one or two venture deals a year. I mean, that's like going on DraftKings or something, right, that you can get lucky and then think you're brilliant. But if you really look at the math, which is very similar to, I think a lot of people are familiar with the math of the kind of ETFs with public equities versus managed money. The math is the math and the math really says for a venture portfolio, in order to kind of triple your money, which is kind of a good rule of thumb for a venture fund, is you really should be looking at 50 to a hundred companies minimum that you invest in over the course of probably three to four years, just so you're not kind of timing a market to the good or the bad. 

So what we try to train our people, our customers about is to have a budget and an annual allocation. Maybe it's $50,000 a year, maybe it's $500,000 a year. Your budget is your budget. Put that to work over four or five years and really try to target a portfolio of about a hundred companies. The math says, if you do that, you greatly reduce your chances of losing money.
It really drops off the cliff. And then your chances of doing this kind of venture kind of numbers really go up. 

Then the third thing that I will just say is part of our DNA and something that I really try to communicate is the quality of the lead investor is the hack that you want to use. So the deal that your local angel group is seeing, which you may want to do because it's fun and interesting and it's supporting your local economy. That is not what we're talking about. We are talking about deals led by Andreessen and Sequoia and NEA and USV and the top tier VCs. That's a different league and a different ballgame and those are the kinds of deals we try to bring to our customers. And by pooling money and networking, we get access to those kinds of deals where if you're an individual, you really have no shot.

And the math again says the good companies are there with those lead investors and it is not necessarily that those people are smarter or better than other people. It is because if you're an entrepreneur, you have your choice of lead investor and that's where you go. So this is Connecticut women's basketball, right? They are picking the very best players in the country to assemble their roster. It is not because there are better coaches, but the correlation is true. 

So when you assemble this portfolio of 50, a hundred companies over four or five years, you want the vast majority of those companies to have incredibly strong lead investors, and again, those… it's not just the names that you'll all recognize, but it's the partners within those firms that have really domain expertise in their business.

It can also be a name of a VC that you firm or individual that you haven't heard of, but they are so good at cyber that is an amazing lead for that particular stage or that particular company. And as we go globally at Alumni Ventures, the lead investors who are going to help that firm in Australia break through, may not be a name you recognize, but it is the right firm. But it's all about co-investing alongside the right lead investor is really an important part in putting together kind of a tier one venture portfolio.

Fred Schonenberg
Mike, I had a question about the communities. One of the things I was thinking about as you launched this, right? Like, I love this sort of hub and spoke model. You've got Yale here, Harvard there, that they can activate those communities locally. And then it ladders up to you all. How did that start to snowball? And then how do you maintain that interest? 

You mentioned angel investing, which is sort of naively where my head went originally. And now knowing this is way more sophisticated than that, but talk to me a little bit about that community and maybe that how do you keep it robust and active and excited and all this?

Mike Collins
Yeah. So a lot of it is communication. We do things like in the micro level. So, first of all, you should understand we have 10 venture teams within alumni ventures. We're roughly 130, 140 employees, but we have 40, 45 full-time venture professionals, VCs broken into 10 teams. And they act like little venture funds. They're sourcing deals, they're evaluating, they're doing diligence, they're developing their own areas of vertical expertise.

We have a space guy, we have a cyber guy, we have three or four people doing AI infrastructure and they know the deals and they know everybody that's a lead. So it's really important to understand that these are the venture capitalists that get up every day within alumni ventures. So if one of our people is doing a nuclear deal, like we closed one today, that teammate who knows all about space has done the due diligence.

We'll basically do a very quick 10 minutes. Hey, we just made this investment community. This is why we did it. Here's the lead. Here's the URL. You can check it out. Our community loves that. They love knowing what they own, how their companies are doing. They love to then follow them in the news. They set up kind of Google alerts or chat GPT reviews of their portfolio. So that's like at the incremental level. 

On the other side of the barbell, we actually like getting together with our people. So in real life stuff is really important. Almost every week we're doing an event. So we have a nuclear night and we invite our portfolio companies and our investors. And we think it's really important and it's fun and it's energizing and it builds community. I'm maybe old school, but I'm still a big fan of getting out of your office, meeting other people, and learning something. They're a lot of fun.

Again, if people follow us on LinkedIn, we post the pictures of our events, people learn, they network. Our portfolio companies love to come and tell their stories. We talk a lot. As I mentioned, sometimes it's an educational night where we're kind of like, hey, here are three deals. Here's how we looked at them. Which would you do kind of thing. We try to make it fun and interesting. 

So, yeah, you build community by communicating with people and then actually physically being with them as much as you can. Again, almost every day we're doing big events, we're doing dinners, we're doing round tables with our portfolio companies where they just are sharing challenges with each other. So we're big believers in real life stuff.

Fred Schonenberg
So I want to get you out of here on two questions. One is, what do you think the future of venture capital is going to look like? How do you think this is going to evolve? There's obviously… AI is sort of disrupting all sorts of things. There's a lot of people using just AI to source deal flow or validate or vet or invest, right? There's the ETFing of ventures rumored. Curious what your take is on where this is going. 

Mike Collins
Yeah, I mean, if I were to give you kind of hot takes on that, I think it's going to become more global, right? I think this started out a long time ago in Boston, Silicon Valley. It works. It is spreading. That's good. So there, market share is going to become more diffuse. That doesn't mean I think Silicon Valley is going to zero. I just think there are more great places that people want to live, work and create great companies. So there are fantastic startups in Mexico City and in Copenhagen. That's good stuff. So I would say that's one. 

I would say AI is the biggest technology of my lifetime. And I think there will be bubbles, there will be pivots. But this is a big deal. It is going to impact every country, every business and every individual's career. I think it will get diffused. I think there will be a lot of unintended consequences, good and bad. Great, great new companies are going to be created. I think people have to reset about the scale here where we're talking we're going to be seeing 10 trillion dollar companies. We're going to be seeing just enormous value created. 

I think it's going to have an impact and that's good for VC and good for investing. Whenever there's disruption and change, there are new winners and losers. And yes, there will be backlash. Bet on it. OK, there will be bad things that happen because of this new technology. You can bet on it. But again, just with the benefit of time, seeing the personal computer and the Internet and the dotcom bubble and mobile, these things, you don't put back in the bottle. 

And I would say this is also a global race. Right. That you are not going to have one company be able to say, I'm not going to play. You are going to be an ex-company. If you're a country that says, we're going to regulate the hell out of it, we want to freeze in time, you are going to fall behind the rest of the world. If you're an individual managing your career and think that you can wait and avoid this, that is going to put you on a different career trajectory than if you lean into it. And so I think it's AI all the way down from a venture capital specific perspective.

I think it is an amazing tool to do what we do better. So I think Alumni Ventures is in a position in which we disproportionately benefit from AI. I sent out 54,000 K1s this year, Fred. And so more technology, more AI, please. Portfolio monitoring, for sourcing, for helping Portfolio Company X make a connection within our network in a more automated, AI driven way. All of that is super good for us. I think there is going to be increasing opportunities for tokenization of assets, including venture assets. I think that's in the future. But I think there's also a place for humans in this world.

We have an AI first fund because we just believe that for everybody that spends their day on the computer and Zoom and AI, they're going to go on after work, go join a running club, or they're going to want to go hang out with other cool people and learn something new and be around other humans. There's hundreds of thousands of years of evolution that are in our brains that are pretty hardwired. We like being around other people. We like nature. And so, I think this is a tremendous opportunity. I am clearly a tech optimist.

I don't disregard it, because I've seen the bad things that come with mobile. I've seen the bad things that come with all technologies. But I'm sitting here in a mill building where people work six days a week, 12 hours a day, and we're 12 years old making denim. And the charity one floor down was basically taking care of kids who were orphaned because their parents were killed on the machines and life expectancy for people working in this mill was 45 years old. So technology is the way our world is run. We're tool makers and I would rather lean in and help use technology to solve problems versus try to romanticize going back in time.

Fred Schonenberg
Yeah, I agree completely. Well, Mike, this has been completely enjoyable. Thank you so much for sharing your insights and your time. Where can people go to learn more about Alumni Ventures and get involved?

Mike Collins
Yeah, it's really simple. Go to av.vc. You can put it on chatGPT or google it. A great first place to start is to attend one of our events to kind of learn about a specific area. Again, all of our alumni fund stuff is really open. So that's a great place to go as well. And I would say join the syndicate. It's free. It's no obligation, but you actually get to see the deals we're doing and hopefully develop a lot of confidence to add this to your portfolio. We think it really belongs in every thoughtful portfolio having a small, appropriate VC allocation. And you got to start somewhere.

Fred Schonenberg
Mike, thank you again. This has been awesome.

Mike Collins
Excellent, Fred. Enjoyed it.