a fund's strategy. Many venture capitalists will focus on markets that have just started growing rapidly, while others may choose a diversified range of markets and industries. While a diversified approach will mitigate risk, a focused fund, which targets a narrow market range, will usually be able to take better opportunity of market movements, particularly if they are positive movements. Calculating risk, for diversification and on a general basis, is a vital part of success for a venture capital fund. The nature of the fund's participants is also highly influential. Funds working only with high net worth individuals, family offices, and smaller institutional investors may have different expectations than funds with limited partners such as large endowments, universities, and institutional investors. Comparatively, a fund's general partner with an accomplished entrepreneurial background may be better suited to participate in early-stage venture fund than a later-stage fund. The collective experience of the general partner team will play a significant role in identifying the stage and industry on which the fund will focus, particularly when the firm is new. After general partners establish a track record, limited partners often feel more comfortable allowing them to invest in markets less directly connected to their background and expertise. Market conditions are extremely important to general fund strategy. For instance, an environment hostile to initial public offerings may prompt venture capitalists to establish investment liquidation criteria based primarily on mergers and acquisitions; since multiples paid in merger and acquisition transactions differ greatly from those in initial public offerings, the financial model of the fund may shift significantly. However, markets are constantly changing, and any general fund strategy based primarily on market conditions must be frequently reevaluated. As it is extremely difficult to predict market conditions, I find this approach problematic, but it is a common one in venture capitalism. 23