Short 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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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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Reserve or hold back 50% or more of the fund for investing in existing portfolio companies during later rounds.
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Focus on finding and backing great entrepreneurs with expertise or insight but otherwise embrace market or technical risk.
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The inverse of Consensus (or Veto), with Conviction, Does the Deal, an individual partner can authorize an investment in a company.
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