21–30 of 89 posts
I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
Paul Graham essentially went this route, no?
This article needs to define its terms. What is a GP? Sure I can google it but this is supposed to be an article that explains that kind of thing, I may as well just google how VCs make money and read a different article.
I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
The TL;DR here is that it's possible to transition into a VC role as a former CTO but it's not a common pathway. Many VCs have followed a standard pathway from Harvard/Stanford/Whartonn MBA into a fund (because it checks the boxes of LP due diligence) , but if you are looking to shortcut that process, then you have to consider how other VCs got their start. The great debate in VC is whether Operator VCs (those who ha…
I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
For those who don't know, their website https://vcstarterkit.com/ is pretty amusing as well.
This is all not necessarily bad, but the incentives are not to be ignored. VCs have absolutely zero interest in stable businesses (remember - they want the volatility). If you're a stable business you would want a value investor who keeps close to 100% of his net worth in his fund, like Warren Buffet or Seth Klarman to give two famous names.
So if 2/3 of the funds income is from the management fee, wouldn't that mean that the average VC fund clearly underperforms the market?
If management fees are 2/3 of the fund's income then the management is twice the performance fee. Given value of fund at start (f_0) and value of fund after a time period (f_1) then the value is: 0.02f_1 = 2( 0.2 ( f_1 - f_0)) f_1 = 20 (f_1 - f_0) 20 f_0 = 19 f_1 f_0 = 0.95 f_1 f_1 = 1.053 f_0 So management fee is 2/3 of the income if the performance is 5.3%. SPY performance is all over the place[0] but you can see y…
This article needs to define its terms. What is a GP? Sure I can google it but this is supposed to be an article that explains that kind of thing, I may as well just google how VCs make money and read a different article.
The most interesting question for me is, if you are a company with VC money and they are on your board, does the age of the vintage of the fund the money came from impact the strategy of the company down to a product level?
It looks like you could literally calculate/estimate the time left in the fund and see how much pressure it will put on the CEO to get positioned for an exit, then predict that impact on product, and the entire culture of the company.
e.g. "we're an engineering driven company," vs. "the fund that gave us the money has 2-3 years left in it, which means all our product decisions are based on getting positioned for a forced exit, so create tech debt and STFU."
Wow, what a great post. The most interesting question for me is, if you are a company with VC money and they are on your board, does the age of the vintage of the fund the money came from impact the strategy of the company down to a product level? It looks like you could literally calculate/estimate the time left in the fund and see how much pressure it will put on the CEO to get positioned for an exit, then predict…