The Ledger
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Toney: Emerging VC managers should sell GP stakes to relieve financial pressure
“So I'm a big proponent, and I think for emerging managers in particular, it helps take some of the financial pressure of having to go a couple years without salary while still being able to build infrastructure and potentially being able to help Cover a portio…”
Toney: No causal data proves personal wealth is required for VC success
“Someone needs to show me the data, right? And I'm not talking anything that's correlated. I'm talking about causal data that if you're not rich, that you can't be a successful VC, because I don't think that data exists.”
Toney: Fund managers should accept LP capital immediately when offered
“If a GP has the ability to close with an LP, if an LP wants to give a GP money, take the money. That's always been my philosophy and approach.”
Toney: Seed and Series A annualized median returns are only 5.6%
“Given that the last 20 years, I don't know, We've probably seen seed series A, 23% annualized returns on the mean versus like 5.6% on the median, which by the way, you'd never incur this level of risk to just get 5.6%.”
Toney: Product management playbooks directly mirror early-stage VC investing
“The Playbook for product management is very similar to early stage BC. The ability to understand a market and where opportunity might exist because of a problem. How many of those people or enterprises have that problem? What are the current solutions they're …”
Toney: Institutional LPs will complete pre-approved venture fund commitments
“If the manager has a prospective LP institutional that has already gone through the approval process, what I'm hearing from institutional LPs is they already have their budgets and plans in place. They will complete those deals.”
Toney: First-time VC fund managers should plan on two years without income
“We had already told GPs to plan on going two years without income.”
Toney: LP GP commit requirements should scale with manager net worth
“I think a better way to think about it is, how much is the commit relative to what the nest egg is for the GP? How much is the GP going to actually feel this one, two, three percent?”
Toney: Early-stage VCs must maximize initial ownership since follow-on buy-ups are unfeasible
“The ability to be disciplined, have the right portfolio construction model, recognize that, you know, you need to get as much ownership on the front end as possible because you're not going to be able to buy up. Those are all the things that are most critical”
Toney: VCs should join early to build multi-fund track records
“Get into the venture business as early as possible. You're going to, you're just going to take a minute to figure out whether or not you're good. And when you have some wins, that's helpful because you'll need to be able to negotiate for better economics and s…”
Toney: Anchor LPs often negotiate minimum closing thresholds into LPAs
“Often if there's an anchor LP, they anchor themselves might actually negotiate into the limited partner agreement, the LPA, that a close cannot happen until a particular threshold relative to the target size has been met or absolute number.”
Toney: Micro VC fund-one GP commitments typically average 1% to 2%
“That commitment can range, but they typically have to commit some of their own capital To the fund, one to five percent was probably the norm. One to two percent in the micro VC world, especially for a fund one.”
Toney: Private equity GP stakes typically range from 10% to 20%
“In the world of private equity, typically the stakes given are 10 to 20%.”