Consensus VC decisions will decline as conviction investing and LP directs grow
Dustin Dolginow · 20VC: The First Online Venture Fund Built On AngelList with Dustin Dolginow @ Maiden Lane · Feb 10, 2016 · at 17:46
Dustin Dolginow, General Partner at Maiden Lane, discusses how decision-making models in venture capital will evolve across LPs and seed funds.
0:00 / 1:07exact quote · 67.4s
720p mp4 · rendered on demand · StarZero watermark
“We're going to see three pretty basic models emerge for how decisions are made, all the way up from LPs down, down to small seed funds. And the three buckets are going to be consensus-based decision-making, and that's every fund that, you know, has pretty much existed to date. Group of people get together, they look at investments, and they decide as a group. Then there'll be non-consensus. Someone yesterday coined the term. It was actually Ed Roman, a syndicate lead we work with. He called it conviction-based investing. In that case, you do not go to a committee to make your investment. It is based on your diligence, your socialization of the investment, and then, you know, your ability to have that capital and invest. And then for LPs, the third bucket will be direct investments, where they basically take from their managers Opportunities that they already have shares in through their investments in funds like Maiden Lane or First Round Capital or Sequoia, and then they invest directly into companies that are a fit for the bigger, broader portfolio. And so the future, I think you're going to see the consensus buckets start to decline a little bit. You're going to see non-consensus or conviction investing start to expand, and I think you're going to see direct opportunities from LPs also starting to expand.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Dustin Dolginow
Venture capital knowledge will become distributed rather than insider-only
“Maiden Lane is being built and AngelList is being built, you know, in the middle of a city center of a major city, and I think that's sort of the bigger trend of where venture is going. It is no longer going to be a skill set or knowledge of the very few. It's…”
Top VC firms will be forced to adapt to new funding models
“Sequoia, Benchmark, Andreessen Horowitz, they're not going away anytime soon. This isn't like, we're out to beat them and kill them. Not in the same way Airbnb is not going to delete hotels overnight. It's going to change how hotels work. I think that's a bett…”
Maiden Lane charges 30% carry to share economics with syndicate leads
“The reason we asked for 30% carried interest is because we share 15 to 20% of that carried interest with syndicate leads.”
Prescription delivery is the most overhyped tech sector
“Probably prescription delivery is amazing. It went from like one company to six in three months. It was wild to watch.”
Canada's tech ecosystem is thriving due to a lower cost of living
“This probably is in the sector, but I think Canada for the last two years deserves full credit for just really slaying it. I think it's an indication of how important cost of living is to young companies getting their start. And Canada as a country is just fro…”