Venture Firm

“Why do venture firms hang together and Paper over the story because, you know, the asset is the firm and the name, and even if you hate each other, you want to manage the process well so you can keep the thing going because the firm has a brand and a reference…”

“You forget that you take a venture investment from a venture firm. You're not taking investment from that individual person. You're taking investment from a company. Then that person leaves. And now you're stuck with some new person and you've given all these …”

“In the early days, why would you go to a middleman, like a venture firm, whose value add is to connect you to somebody else, who by the way, then still doesn't have any interest in actually helping you, right? Versus going directly to these companies that you …”

“In my opinion, I think there's only maybe three ways to build a venture firm. The first way is to have extremely strong brand and be a leader in the market. So thank Ponzo, Sequoia Andreessen, funds like that, where over decades they build a moat that is their…”

“I know there's been a bunch of AI native rollups launched by venture firms in property management. What tech, like what's their real advantage? Like, are they gonna have technology that's better than anyone else? I would say the answer is no.”

“The short answer is a lot of the operational value add from a lot of these firms is wildly overstated. The wise advice is super not appreciated.”

“The feedback we get from people who come from other firms is we have less politics than firms with, you know, 10 or 11 people you know, and it's just, it, that's a cultural thing.”

“I don't know if they're fucked up cultures, but I don't think they're incentivized to have the best returns. If you're an associate at a firm, and you're maybe there for five or six years, your job is to get a deal done that's gonna get marked up quickly so yo…”

“I know a lot of people are like, there's so many venture firms. This is horrible. Returns are going to go away. I'm actually, I think it's the opposite. I think the markets are efficient enough where everybody's got a specialization and a niche, and you get th…”

“I think there's a real reason, which is what happens if you, every, these take like a year or two years to gestate as ideas. So two years ago, all these venture firms sitting around watching valuations go bananas, and like, this sucks, I don't want to pay thes…”

“Pretty much all of the venture firms we worked with, if in 1995, they were managing a two hundred million dollar fund. By 1999, they were managing a billion dollar fund. And then they were investing the billion dollar fund in nine months, which again, proved t…”

“We always found it extremely useful to talk to the CEOs and the entrepreneurs of the portfolio companies of the venture firms”

“I wouldn't say we spent a lot of time worrying about the ones we missed. There were certainly venture firms that we might have worked with that did very well, but we didn't. The ones that we did work with were fantastic. There wasn't much point in losing sleep…”

“And so I do think with the war chest that a lot of the venture firms have right now, I think it's going to take a while before people actually stop dancing. I think everyone's going to convince themselves, at least in the near term, that this is a good buying …”

“And we're not seeing as much of, you know, cause what happened in 2021, 22 was you had crossover firms really come in, right? Private equity firms, public firms come in to venture. We don't see that anymore. I think we, at least we're not seeing too much of it…”

“Look, you're trying to hit a return multiple, but it's much easier when you know, when you believe with some vigor and evidence that your chance of going below one X is very, very small.”

“They really thought about building A-C-C-C like a startup, right? And not like a traditional venture firm. And that curiosity of how do you find product market fit? How do we experiment a lot? How do we scale aggressively? That was just pretty fascinating to s…”

“Josh Wolf at Lux Capital wrote his quarterly letter and he predicted that 30 to 50% of venture firms would cease to exist.”

“It's especially hard in a venture firm in light of the power law, right? Again, very few companies are going to Create returns, which means there's likely to be concentration among different investors. Which suggests that you can have a skew of ego or insecuri…”

“The top quartile, the best 25% of venture firms from the twenty-fifteen vintage have not returned their investors all their money. We're nine years in. The top quartile has not given their investors their money back.”

“Like all of those are implications that I think actually when venture firms don't consider and they just raise more money and then figure it out as they go, like are bad for LPs and bad for founders and thus bad for those firms.”

“How many great venture firms are there? Maybe 10. How many venture firms are around today as a consequence of the last TMT boom? Probably 300. So three hundred's gonna peel back. It has to. And it may be a decade long process.”

“We found that the due diligence calls, which is very common, underwriting venture firms, wasn't as helpful in the real estate business. It's a less collegial business. On a venture deal, two venture firms can be on the board of a company, and they're working t…”

“Most venture firms have plenty of fees to cover the team and more, especially at that fund size scale.”

“I think AUM is the stupidest thing to talk about as a venture firm, because back to what we were talking about earlier, small funds outperform larger funds, and so you really shouldn't be talking about how much capital you've raised. I'm okay with people talki…”

“If you have an investor, private equity or venture firm, that claims that they make a big difference in their companies, that they're there with those companies operationally, that they change them in a positive way. And you have 40 or 50, there is no way you …”

“There were an enormous number of venture firms that Hawk their way into just completely doing zero work here.”

“As VCs, we invest in these firms that have durable competitive modes when venture firms have, it's largely brand, right? It's largely that, that Competitive advantage that comes from a brand.”

“So usually I would say in the deals that I've been a part of lockups are very, very common, if not just Universally present. And furthermore, those lockups are really long like multi-year lockups. And for venture firms, I mean, venture firms are structured as …”

“Maybe some of the larger ones will. They're public, and maybe they won't have as much issue with it, and you can get it through FOIA, kind of those things that people do, but the venture firms, some of the smaller ones, no way.”

“Venture debt is just a tool to underwrite the venture firms.”

“Because we see so many venture firms today just struggling at their core with generational transfer.”

“There are a lot of young people within those venture firms that have never experienced a down market, and certainly young founders that have never experienced inflation, rising interest rates, inability to raise capital, etc. So I think there's some painful le…”

“I got rejected by many venture firms, which not many people know, but we are going to have an open conversation today.”

“As soon as I go in-house somewhere, Like I lose half of my value or, you know, X percent of my value as soon as I go in-house somewhere. And that is kind of one, even though, you know, I do do sponsored posts and all of that, there is like this independent voi…”

“On a good day, I think venture firms on their best day Our golf teams, like individuals shooting their best score, their lowest score, and adding them up at the end. We really think about our team and our approach more like a basketball team or a soccer team, …”

“About a quarter of them have at least two plus female decision makers, but 61% of them have zero and 80% of venture firms still have no black investors.”

“Well, I do think that the secondary markets Are really at an inflection point, and there's more and more capital flowing into the secondary markets. You know, we've seen it, of course, first for entrepreneurs. There's been a pretty robust secondary market avai…”

“There's constraints on venture firms, you know, doing too much secondary investing because then they have to register as an investment advisor. And there's a bunch of regulatory overhead that comes from that, that people are trying to avoid.”

“There have now been over 360 venture firms that invested in space. They've invested in 200 nearly identical small site launch companies, for example.”

“If you are like me if you are from a, like a unconventional background for a venture firm, not in one of those hot startups or not in a VC firm, not in a, not the financial world, then I think it makes sense to kind of double down on certain aspects whether yo…”

“I think the biggest enemy for venture firms is actually groupthink, and that kind of almost goes back to the solo GP versus a partnership type of a model. There's a lot of benefits to having partners and people Questioning and serving as a, as checks and balan…”

“I talked to a number of venture firms, and the message that I got from a lot of venture firms was that given my background, I was not a perfect fit for venture. And when I double clicked on what they meant by that, it was more that there were not a lot of Lati…”

“Where I become more skeptical is groups that add later stage focused funds or other vehicles like that that aren't actually playing off of the inherent advantage that they have being in companies already. If they're just sourcing late stage companies they thin…”

“I think there's three things that where a venture firm can fail. Number one, you got to have great performance. That's an obvious one. Number two is you got to make sure that the young people coming up get the opportunities to grow economically and sending the…”

“A lot of the venture firms that used to be early stage focused venture firms have gone from, you know, having 304 hundred million dollar funds to billion dollar funds. And these billion dollar funds are not likely investing three to four million dollars at a t…”

“If you have a hundred million dollar fund, you still need to make three, four or five X on that to be a top tier firm.”

“And we found that that is actually suboptimal for them because those firms have a low acceptance rate. And so if you spend all your time meeting with the top five firms and they all pass, then you're sort of stuck.”

“So a typical venture firm will actually only use 30 to 40% of its fund for initial checks, and they will reserve 60 to 70% for second checks and third checks and doubling down on their winners.”

“I found that if you collaborate and work and build deep and meaningful relationships with other venture firms and partners, actually, they're very willing to work with you. The ones who are competitive are the ones you probably never reached out to and tried t…”

“Venture firms tend to be partnership-oriented. They don't operate around clear OKRs or KPIs. So you're not kind of run in the same efficient manner that traditional startup might be run in.”

“And regardless of who takes that board seat or who ends up being interfaced with the company, we all need to get credit for that. And that's something traditionally very difficult for venture firms to do because all credit just falls to the one person.”

“The best way to get any kind of round done is do the social engineering that you need to do to make sure other people in the market who are pretty well-regarded are talking you up, because that's the best way to get venture firms super excited.”

“A venture firm early on, if there's no data points, we have to have something that we can hold onto and say, Yeah, these guys haven't done this before, but, right, they have some core insight or some knowledge of the market where they've spent more time on thi…”