My Guest
Mark Higgins is a Senior Vice President at Index Fund Advisors, where he provides investment advisory services to institutional plans and high-net-worth individuals.
Mark is the author of Investing in U.S. Financial History: Understanding the Past to Forecast the Future, a sweeping 500-page survey of American financial markets that begins with Alexander Hamilton’s creation of the first U.S. central bank in 1790 and traces the country’s economic evolution through to the present day. The book reflects Mark’s practice of “applied financial history” — using historical precedent to surface risks and opportunities that conventional quantitative models are apt to miss. His commentary has been cited by CNBC, the Wall Street Journal, and Morningstar, and he is a frequent contributor to the CFA Institute’s Enterprising Investor blog.
In this episode, Mark brings that historical lens directly to the world of private equity and venture capital, tracing the ecosystem from its origins — including Georges Doriot’s American Research and Development Corporation, the first institutional venture capital firm — through the buyout booms and busts of the 1980s and beyond. It’s a fascinating conversation for anyone who wants to understand not just where PE and VC are today, but why they evolved the way they did.
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What Can We Learn from the History of Private Equity and Venture Capital? A Conversation with Financial Historian Mark Higgins – In The Trenches
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Episode Summary with Timestamps
- 00:00 Why financial history matters to today’s private markets
- 05:09 Postwar bank caution creates venture capital
- 08:12 The whaling-era roots of VC’s home-run returns
- 10:16 1980s buyouts, falling rates, and junk bonds
- 12:34 How the prudent-man rule unlocked institutional capital
- 15:08 Early returns and the capital-cycle pattern
- 18:38 Yale’s model and the scale problem
- 23:24 Spotting saturation and the push toward retail investors
- 28:21 Evergreen funds and liquidity-mismatch risks
- 32:11 Why excess capital compresses returns
- 36:08 What differentiates enduring venture firms
- 40:22 The alternatives wave: crest, correction, and uncertainty
- 46:04 Why private-market exits are constrained
- 47:17 The personal cost of calling out systemic risks
- 50:10 Revisiting the book and lessons from financial history
- 52:04 Making financial history accessible to everyone
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