Short Description: Mindset is similar to a public market-style investor in that focus is on the selection of the right investment without emphasis or belief in post-investment portfolio company support. Benefits: Avoids the trap of thinking you are the management of the companies and therefore focuses you on picking good management that can accomplish the […]
Read the postShort Description: A way for a GP to build brand for sourcing and LP fundraising is to have investments in companies that are successful and well known. The logos of these well-known and respected companies can be used in the GPs marketing materials hence the term “buying logos”. Buying logos is distinct from investing early […]
Read the postShort Description: Since at least the medium-term success criteria for a GP will be mark-ups from future rounds of financings lead by other firms in portfolio companies, one can choose to optimize for investing in companies that will likely be fundable. This involves paying as much or more attention to other minority investors’ sentiment and […]
Read the postShort Description: An investment strategy, where you pursue lower-risk/lower reward investments. In baseball, the analogy is not to “swing for the fences” with a lower probability chance of making a lot of money, rather have a high probability of making money on each investment. It can impact the investment sectors, business plans, financing strategy, valuations, […]
Read the postShort Description: Mindset is similar to a majority ownership PE-style investor. In this approach, the CEO/founder works for the investor and should fully report on a regular basis. Details of the CEO/founder’s execution should be subject to review at any time by board members/investors and they should not move forward with projects, capital allocation decisions, […]
Read the postShort Description: In the Cofounder pattern, a venture firm identifies a market need or a technology and recruits, key members of management, to make it happen. This approach is more common in life science investing or with research coming out of a university. It also happens in Venture Studios with technology businesses. Benefits: Being willing […]
Read the postShort Description: A mental model of the company side of a GP position. First is sourcing or seeing the companies as it is not a given in a private market that the set of investments will be available to all. Second is choosing which investment you want to make. Third is being able to make […]
Read the postShort Description: The highest prices are paid for companies where the acquirer is motivated. Some believe that acquirers will be the most motivated when they already know a company, have been interested in the product/service, and identified an opportunity for working together themselves. Therefore, the thinking goes, the company should build value, be known […]
Read the postShort Description: A dual-track is when a company works simultaneously on conversations about selling the company completely and preparing for a financing round (or IPO or direct listing). Benefits: Many times the best deals happen when there are urgency and a clear and attractive alternative. If the alternative to being purchased is a clear credible […]
Read the postShort Description: Since the common economic model for VC is ~2% annual management fee and 20% of the profits, GPs have the opportunity to make more absolute dollars with larger fund sizes. Grow AUM is a strategy where GP will raise larger funds or raise funds more often in order to grow the assets under […]
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