Fundraise-On the one hand, as VCs, we are on the vanguard of innovation. We invest in exciting technologies that can and will change the world. However, from a different perspective, we are money managers who cling to conventions and are very, very slow to change. Raising money is the old school part of venture capital that hasn’t changed fundamentally since the industry got started over a half century ago. This is no surprise if we look upstream and see where… ...
Invest-In the last chapter, we looked at the fundraising process for VC firms, whose GPs (general partners) go on the road much as startups do to pitch to investors, who will become the fund’s LPs (limited partners). Most of the capital raised by VC firms comes from institutions. Hence the definition of venture capital, institutional equity investing in high growth startups. Once we have secured enough commitments from LPs to reach our fundraising goal, we may close the fund, meaning… ...
Grow-This aspect of the VC’s job, helping startups grow, is perhaps least appreciated and yet most important. Most VCs I’ve worked with consider themselves company builders, not simply investors. We don’t just create a portfolio and kick up our heels. For many, this is the favorite part of the job, rolling up our sleeves to help startups succeed. A startup is a unique type of investment going through a remarkable metamorphosis. The months following a venture capital investment are tumultuous… ...
Exit-Ah, the exit. Such a terrible word for such an important part of the process. Exit refers to the opportunity for investors to exit the investment, but VCs would be well-served to figure out a better way to communicate this to founders. It doesn’t seem like such a fun date if one partner is always looking at the exit, right? But VCs must exit. It is a simple fact of life, built into the structure of the investment vehicle, and… ...
