Description A scout fund or network is when an established VC fund delegates most or all decisions on identifying and selecting investments to a loosely affiliated party. Often the scout is investing 1 to 10% of the amount the main fund would normally invest. The scout is sometimes a founder or other professional in the […]
Read the postDescription While not common, there are some investors who use a system of asking outside experts for input or effectively to make the decision for them. Sometimes this takes place as a committee meeting where the judges or selection panel discusses a series of applications or proposals. Other times this may be a survey where […]
Read the postDescription A public decision rule is a stated threshold or set criteria when an investor will invest. Often the decision rule will include some flavor of Follow Only. For example, participants in a particular program or school who raise $X from other investors will be eligible for $Y investment from this fund. Benefits Create Distance […]
Read the postDescription A strategy of only considering for investment companies that have already secured a lead investor or significant other investors/capital. This decision-making pattern can be mixed with others like Strong investment committee, Consensus (or Veto) or Conviction Does the Deal. Often this is an approach used by investors new to a stage, strategy or […]
Read the postDescription: Revenue-based financing (RPF) is a financing arrangement where a company takes in cash now and pays back over years a percentage of monthly or quarterly top-line revenue (say 1 to 9 percent) until a fixed amount is paid back (usually a fixed multiple of the original cash provided say 2 to 3 times). It […]
Read the postShort 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, […]
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