Description By showing a founder that they care through lots of attention, a VC may make a founder feel that they are more interested, available and willing to help. Examples include giving gifts, showing up, and making introductions. Benefits Genuine attention can be helpful in building a strong relationship with a founder. Trade-offs If done […]
Read the postThe concept of judging a business by “lines not dots” has become something of a cliche in the venture capital community. The idea is to evaluate a company, not based on its status today (dots), but rather by the direction and velocity of its development (lines). VCs are trying to judge how fast a company […]
Read the postVCs must determine how best to support the companies in their portfolio. There are many approaches to allocate time and resources among portfolio companies. Even if a VC is looking to make Proactive Intros, should a VC focus efforts on helping “winning” companies in their portfolio or assisting struggling companies? VCs may want to be […]
Read the postDescription “Tranched investments” (AKA milestone-based investments) describe when an investor agrees to fund a company in stages based on a series of milestones. Each stage (or trache) corresponds with a certain accomplishment or pre-determined goal that both parties agree to—this may be a financial metric like revenue or a product development milestone. This approach to […]
Read the postA 2018 study by Carl Fritjofsson (Creandum) and Henri Deshays (Newfund) surveyed 121 company founders and 98 VCs to identify similarities and differences between the two group’s preferences. Source The data here is a couple of years old and individuals may not follow through on their stated preferences; however, this study provides an interesting portrait […]
Read the postWhat does it mean when someone is a Venture Partner at a VC fund? And how are they compensated? The role can mean a number of different things depending on the firm and perhaps is intentionally vague. Sometimes someone is a scout with the ability to write small checks without the normal decision process. Sometimes […]
Read the postUpdate 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 […]
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