Short Description: For a given follow on strategy, and the planned number of portfolio companies, the check size of an investment is almost mathematically dictated by the total fund size. In a way, the number of portfolio companies is often closely related to check size, because stage of company and level of portfolio support expected […]
Read the postShort Description: A compensation model common in other professional services firms where partners “own” deals that they source and are compensated largely on the results of those deals. Benefits: Accountability may spur some to greater levels of performance Attract and retain stars: some high-performing partners may be attracted to or stay for longer with the […]
Read the postShort Description: The conventional wisdom used to be a founder should make way for a professional CEO once the company has achieved product-market fit. While less in favor, when a founder does not have or build the skills, relationships, and habits to run a company, they can be replaced. Some investors and some founders prefer […]
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As opposed to Double Down on Winners, this strategy emphasizes the vast majority of a VC funds capital being allocated for investments in the original investment in a company rather than later rounds after buying some ownership.
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If you believe that investing in startups has a power law of returns with a very few winners generating the vast majority of the returns, the strategy is to invest in more companies in order to increase the chances of having a true break-out winner in the portfolio.
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For those firms that Double Down on Winners, in order to avoid the trade-off of Follow-on for Love or Self-Protection, some firms have different people who make the decision on follow-on vs. the initial investment.
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The approach provides for a clear separation of duties between management and investors/board members. While supportive of the business, the portfolio support
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One step more involved than I’m Here if You Need Me is to proactively be on the lookout for customers, investors, employees and partners for portfolio companies and provide those introductions.
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A VC firm strategy with division of labor, where some people’s job is exclusively helping portfolio companies with no responsibility for sourcing or deciding on new investments.
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The private belief and/or the public statement that the VC firm is supportive of the founder being CEO through all stages of the business.
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