Silicon Valley VCs cautious with personal finances

NEW YORK, US: Venture capitalists make their fortunes betting on risky startups but they seek security in their personal portfolios, said Silicon Valley-based financial adviser Eric Thurber.

Thurber, who along with five colleagues specializes in financial advice for Bay Area entrepreneurs, said his job is to take some adventure out of the personal finances of venture capitalists.

"You think of a lot of these people being risk-takers, but frankly most of our clients' No. 1 concern is wealth preservation," he said in an interview. "They just need to make sure they invest (their money) wisely."

Thurber is one of three founders of Three Bridge Wealth Advisors, a wealth advisory and venture capital fund management business located on Sand Hill Road, the epicenter of Silicon Valley's venture capital world.

The three founding partners of the Menlo Park, California, firm -- Thurber, Fred Molfino and Brett Sharkey -- left Morgan Stanley Smith Barney in August, though they have worked as a team for more than a decade.

They built their venture capital niche by managing stock distributions and sales for venture capital funds, and then moved into financial advice for the people running the funds.

"We felt that if we built a system and a service to be able to create the liquidity then we'd have an opportunity to discuss what to do with the liquidity," Thurber said.

Three Bridges joined a long list of brokers and advisers who left big banks such as UBS AG or Morgan Stanley to launch their own independent practices.

Entrepreneurs are better able to relate to the firm now that it is independent, Thurber said. However, the transition has not been entirely smooth.

When Thurber's team left Morgan Stanley Smith Barney they advised more than $740 million in assets. Eight-and-a-half months later they are managing just $250 million.

Thurber says some of the earlier $740 million in assets came from institutional clients and some were investments that could not leave the Morgan Stanley Smith Barney platform.

He said Three Bridge is still in the process of transferring clients and recruiting new business. "We've probably grown $50 million in the last two or three months," he said.

Venture capitalists invest money in ideas and brand new startups far too risky for traditional investors. Some, like search engine giant Google Inc, become wildly successful, but other ventures fail.

As a result, VCs often have much of their net worth tied up in a narrow range of hard-to-sell investments. Thurber said his key goals in managing such wealth are diversification and asset protection.

"We look at many alternatives that are going to be lower risk, lower return, but aren't going to be the kind of investments that are leveraged and put capital at risk over time," he said.

Three Bridge often suggests conservative investments such as fixed income while gold makes up about 5 percent of a typical portfolio.

"We are not aggressive investors," Thurber said.