Update Answer: Probably because it is discouraged by the SEC. “Furthermore, even where the compensation received by a finder is based on the introduction, and not the outcome of the transaction, the SEC has taken the position that a person who accepts a fee for introduction of capital more than once is probably “engaged in the […]
Read the postDescription Venture capitalists have a crucial decision to make about how best to allocate time when managing their portfolio. One option that a VC can consider is a “Help-Until-Next-Round” model. This involves aiding a company’s founder in reaching their goals for a subsequent round of funding thereby providing time-limited direct support. Benefits A Clear Goal: […]
Read the postShort Description By becoming a true expert you will have other experts refer deals to you. And people who are not experts will also send deals in that field to you. The trick is to pick a field that will be relevant to investing and where you can develop true expertise. You may already have […]
Read the postThe almost universal revenue model for a VC firm is fees plus a share of the profits. Firms charge “management fees” as a percentage of assets on a quarterly basis. GPs share in profits (called “carry” or “carried interest”) when the fund sells stock. Fees cover current expenses for the fund and employees. As an […]
Read the postShort Description Universities are often the nexus of new research, insights and talented people. By connecting with the university community, you can tap into this for dealflow. Or you can catalyze companies that might not exist otherwise. Examples of tactics are: sponsorships teaching formal programs with the tech transfer office spending time on campus (hosting […]
Read the postShort Description Outbound strategies are when a VC firm, without prior contact, reaches out to a company to explore making an investment. It is called “cold calling” or “outbound origination”. When firms commit to oubound they set volume goals and can dedicate staff. Like an outbound effort in a startup, there are distinct phases to […]
Read the postShort Description A wonderful way to find high-quality referrals is from existing portfolio companies. In the Founder-as-Customer Frame, these are the word-of-mouth leads that are so valuable to a business. Benefits High Quality Leads: Your current portfolio is more likely to associate with high potential founders. (And if for some reason they are not, you […]
Read the postPotential LPs in a venture fund ask themselves and wonder about incentives. How can I align interests with the fund manager to reduce the principal-agent problem? How can I ensure that that GP will be focused on stewarding my capital and taking appropriate risks to generate returns? A classic answer is to seek to invest […]
Read the postWho is the customer for a venture capitalist? A simple question with profound implications. You will want to agree with your firm about the answer. The two most common answers are: LP: investors in the VC fund are the ones that pay the fee and carry and so they are the customers. Startups and founders […]
Read the postA simple yet powerful mental model. You make money in venture capital by investing in companies that are not popular but are successful. There are a number of ways to be non-consensus including being first to know about a company, or investing in a company that others actively dislike or by investing in a region […]
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