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VCs aren’t your friends

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Re: VCs aren’t your friends

#321

Post by alephnerd »

throwaway11460 wrote: post #318
alephnerd wrote: post #315

Earlier quoted context omitted.

> meant universities Nope. I meant departments. The T10 programs handle CS admissions at the College (Engineering) and Department level. When you apply for a BS EECS at Cal or BSCS at CMU, it is the CS department (or School of Computer Science) that handles the entire application review process. Only more traditional LACs (the kinds modeled after Harvard College or Dartmouth College) put all applicants in the same bu…

I think we agree, my point was that you are not talking about high school (15-19 year old children where I live). But now I see that their reply could also mean that the people are highschoolers at the time they are applying. I understood it as acceptance to high school itself.

Makes sense!

Re: VCs aren’t your friends

#322

Post by fuzzfactor »

dmurray wrote: post #30
keiferski wrote: post #21

The way VCs filter out potential investments seems fairly similar to the way Ivy League schools filter out potential students. (Probably because they are comprised of the same people.) It is not really about technical brilliance, or innovation, or anything that is written on their website as a core value. It's more about whether you're smart enough and can follow instructions and fit into the overarching institutiona…

I'd say Jobs would have blown them away. He was a businessman and an obsessive who knew when to focus on the design versus the product versus the money. If investors in his era wanted a perfect pitch deck, his pitch deck would have been perfect. Tesla might have been more likely to focus on having the tech working at the expense of everything else.

>Jobs would have blown them away.

Looks like he did exceed everyone's expectations.

OTOH people who prefer the conventional are not likely to recognize the most promising outliers for what they are, it can go right over their head as if there was no difference from those having below-average potential.

Re: VCs aren’t your friends

#323

Post by vessenes »

earnesti wrote: post #295
vessenes wrote: post #282

Earlier quoted context omitted.

There's a lot of nuance here. A $100mm fund could be a single guy/gal working from her office, running money in an industry she knows with a little bit of admin support. In that world, $2mm a year in fees is plenty to keep the lights on. Some fund managers I know in this situation don't call all the fee; there may be social considerations / signaling the manager prefers to make. Some spend it all and then some of the…

> Absolutely none of them think that the fee is 'retirement money' You are sure you can speak for all of them? There are tons of VCs... To me the 2% running fee sounds pretty nice, combined with somewhat low pressure job compared to many others. Of course it is not nice if your fund doesn't make it but you are guaranteed somewhat cushy position for 5-10 years.

Yep I'm sure I can speak for all of the $100M-fund work out of your home office types. Or at least > 99%. The Venn overlap between "content with promising people you'll make money for them believably", "too cheap to spend on office / marketing because your fake pitch was so good nobody will need it to feel comfortable", "enough executive function to make believable calls on believable companies while doing no sourcing work" and "$2mm for three years until people catch on, but def don't send me to prison" is absolutely zero or very close to it.

Most who run a fund like this do not think of it as low pressure or cushy, regardless of goals. Something I tell my portco CEOs a lot is that as much as they want to raise money, or need money for their company, in general, VCs they are talking to need to write checks even more. Just not bad checks.

Re: VCs aren’t your friends

#324

Post by npongratz »

giansegato wrote: post #277
vidarh wrote: post #271

Earlier quoted context omitted.

It might seem weird, but most VCs are fairly low-margin businesses day to day, then they either get a big payday or not (mostly not), once the fund starts to wind down. The odds of making it big as a general partner in a VC fund are not great. A VC has to live of management fees for the fund, which are a tiny fraction, typically half a percent, and that needs to cover both the initial investment process and all manag…

VC management fees are typically 2%/y. if a VC fund has $100 million in committed capital, the annual management fees would generally be between $2 million and $2.5 million. it's a lot of money.

Is that 2% on cash the VC fund directly contributed, or is it 2% on total funds injected into the business including loans the VC saddles the business with? (Or is that kind of leverage typically only done by private equity funds?)

Re: VCs aren’t your friends

#326

Post by [deleted] »

alephnerd wrote: post #267
humansareok1 wrote: post #252

Earlier quoted context omitted.

The number of Stanford Juniors with 1 summer internship at a VC posting 'deep' Startup insights or advice is shocking. Like what do these kids with literally no experience running or starting anything know about companies? It's mind boggling.

VC Internships are intense, and not every Stanford student can land one. While some advice might be a bit meh, a lot of it is information that has value. And, no offense, but there is a massive difference in calibre between a Stanford/Cal/MIT/T10 CS program (they tend to have 2-4% acceptance rates to either the college or the CS department) and other programs. This doesn't mean that there aren't high calibre candidat…

[deleted]

Re: VCs aren’t your friends

#327

Post by benreesman »

NickC25 wrote: post #257
keiferski wrote: post #203

Earlier quoted context omitted.

Nepotism to me implies a kind of incompetence, in that people are selected purely for their relationship to the decision maker. I don’t think these people are generally incompetent at all, although certainly some exceptions exist. It’s more that the filtering mechanism eliminates anyone that doesn’t color in the lines exactly.

I don't think it implies incompetence, but rather, an ability to not know the world outside of the one that was made for the recipient of the nepotism. I grew up in a fabulously wealthy suburb of NYC, a town often dubbed the "hedge fund capital of the world". I went to school with the kids of people who managed or worked at some of these funds, or worked on Wall Street. These kids were not and are not dumb, let alone…

First I’d like to thank you for the thoughtful, introspective, self-aware comment.

I have no grievance with people who had slightly better starting conditions than others. My background wasn’t exactly fun but I didn’t grow up in the same postal code as Easy E, a lot of people have it a lot worse than being pushed around as a kid. My childhood was like: “you’re on your own”.

My ex-wife’s background was a horror film, an Ellis novel and she cleanly tests 185-ish on proctored Stanford-Binet. I’m at least somewhat aware of the difference.

What I have an issue with is the fungibility of one’s parent’s or lover’s or advocates wealth into further capture. That’s the thing I’ll be running for office to make not only a felony but one that gets enforced.

You sound like a cool person who is aware you supplied two of three ingredients around success: long hours and table stakes, but my quasi-informed read of your remarks is that you paid that rake.

It also sounds like you understand good cards tend to be the dominant term, and I find that even more noteworthy and admirable than the first two.

Good day Sir or Madame.

Re: VCs aren’t your friends

#328

Post by bbor »

mrgoldenbrown wrote: post #316
azemetre wrote: post #270

Earlier quoted context omitted.

Wait until you find out the work experience of people consultancies send out to clients. It's often one experienced person with a bunch of grunts pumping out "work." In a previous life I worked for a health insurance company that paid a million dollars to the Boston Consultancy Group on if we should use agile or not for development. The best part was seeing the half dozen or so people in our offices working so dilige…

IME it's not like McKinsey and friends are necessarily sending highly qualified people either. So it wouldn't take much to "beat" them on merit. It's frustrating to watch them get paid so much to recommend the thing we already recommended in house, except their version is missing all the hard parts because they never bothered to check whether the required infrastructure exists or can even be legally installed at the…

McKinsey is about as close as it gets to cartoon supervillains in real life. And they must know it, right? Maybe they hide their role from the rank n’ file, but I doubt it. Truly a useless industry, and a significant symptom of our corporatist malaise.

The amount of money the government spends on useless contractors… shudders

Re: VCs aren’t your friends

#329

Post by balls187 »

michaelt wrote: post #69
fsloth wrote: post #61

Earlier quoted context omitted.

In the tweet the wrong date was not a red flag due to lack of detail as such, but because it signaled: a) they had been raising for a while now b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit) So ”the market” did not consider the startup investable, and they did not think about their sales pitch strategically enough … this VC would have liked to be sold to, not just a sou…

> the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit) It baffles me that a person successful enough to get put in charge of an investment fund can have such incredibly thin skin. How would you even function in the real world if you were so easily offended?

Not to defend the VC in this case, but thin skin assumes that the VC did not take the meeting because they were offended by not being picked first. VCs and Investors are more often than not lemmings with strong FOMO bias, and perceiving no other VC is interested is enough of a signal to not waste time.

From my own experience having met with VC's and investors is that most are inundated with pitches, and the old addage of 'Take every meeting you can' has been replaced with 'Say No by default.' There is no exact science, and so there are proxy signals they use in their heuristic.

It reminds me of the scene in money ball where the scouts are complaining about a baseball player who does not date an attractive women, so therefore they should not sign him because he doesn't have confidence. https://www.youtube.com/watch?v=6naO8n6HsqE

Re: VCs aren’t your friends

#330

Post by cajunboi34213 »

drdrek wrote: post #291
cajunboi34213 wrote: post #288

Earlier quoted context omitted.

Community of users applies to b2b as well. It could just be followers on linkedin where you get engagement from your ideal customer profile buyer. VCs looks for signal that you/team will execute. Best signal is undeniable evidence that you are executing and they are just getting on at the right time.

Absolutely, so many people don't understand that a great deck and a tech demo is in 99.9% of the time not enough. You need a strong signal that you are on the right track: user engagement, LOIS, actual sales. The more you can show the better. If you didn't get to that point don't be surprised if you get the canned response of "This just does not seem like the right opportunity for us". The first investor in your star…

Here are two hard earned lessons from my experience fundraising. 1. If an investor isn't interested, cut bait. It's usually clear in the first 15 minutes. No follow-up with argument/data will convince them. Why they aren't may or may not teach you anything. Just move on and continue pitching. 2. Once one investor is interested, getting meetings with others is MUCH easier. If they can't lead, they will intro you to someone they've worked with that can. Getting in front of the A-list investors is hard as they see every deal and can pick and choose. If you can't get a B/C-list investor to term sheet, you or your biz isn't fundable (sorry). If you easily get B/C investors to term sheet you can probably get a brand name firm to steal the deal with better terms. In my experience A-listers aren't discerning on price if they believe in you and/or the biz. This seems to happen to the B/C investors all the time, that's why when they find you, like you/biz, they will drive you to close quickly. 2 months as referenced in OP is an eternity.
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