How VCs Make Money
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How VCs Make Money
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Re: How VCs Make Money
#2Brilliant post — very informative + clearly written.
> What goes unsaid, is that only the actual partners in the fund get any carry, associates just get a comfortable salary and the prospects of becoming a partner (at another firm obviously)
"(at another firm obviously)" — I've heard this in other discussions about VC careers too. Why is it the case?
Re: How VCs Make Money
#3Brilliant post — very informative + clearly written. > What goes unsaid, is that only the actual partners in the fund get any carry, associates just get a comfortable salary and the prospects of becoming a partner (at another firm obviously) "(at another firm obviously)" — I've heard this in other discussions about VC careers too. Why is it the case?
Because it takes 10 or more years for one fund to run its course. If the associate stays with the VC firm, it's a long uphill road rising to the top. The fastest shortcut is to jump over to another firm that needs that associate's skillsets, and might even be open to issuing a profit's interest (split off of carry).
Re: How VCs Make Money
#4Brilliant post — very informative + clearly written. > What goes unsaid, is that only the actual partners in the fund get any carry, associates just get a comfortable salary and the prospects of becoming a partner (at another firm obviously) "(at another firm obviously)" — I've heard this in other discussions about VC careers too. Why is it the case?
> (at another firm obviously)
I have no insider knowledge but I guess it might be due to glass ceilings: https://en.wikipedia.org/wiki/Glass_ceiling
Re: How VCs Make Money
#5I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
Re: How VCs Make Money
#6I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
I have not tried it but I have seen it done. Some VCs like to have in-house technical expertise to better assess candidate companies. I'm not sure if it would be a clean transition but there definitely seems to be a pathway for it.
Re: How VCs Make Money
#7I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
Paul Graham essentially went this route, no?
Re: How VCs Make Money
#8Brilliant post — very informative + clearly written. > What goes unsaid, is that only the actual partners in the fund get any carry, associates just get a comfortable salary and the prospects of becoming a partner (at another firm obviously) "(at another firm obviously)" — I've heard this in other discussions about VC careers too. Why is it the case?
Because it takes 10 or more years for one fund to run its course. If the associate stays with the VC firm, it's a long uphill road rising to the top. The fastest shortcut is to jump over to another firm that needs that associate's skillsets, and might even be open to issuing a profit's interest (split off of carry).
How come they need to wait til the whole fund to run its course before bringing on new partners? Don't they raise new funds every few years, before old ones have entirely exited?
Re: How VCs Make Money
#9Brilliant post — very informative + clearly written. > What goes unsaid, is that only the actual partners in the fund get any carry, associates just get a comfortable salary and the prospects of becoming a partner (at another firm obviously) "(at another firm obviously)" — I've heard this in other discussions about VC careers too. Why is it the case?
I've seen more than one associate at a VC firm become partner. And I don't know that many VCs funds intimately (about 40).
Re: How VCs Make Money
#10I've sometimes wondered if transitioning from CTO to VC makes sense/is possible, has anyone tried that?
I enjoy reading Adrian Colyer‘s blog https://blog.acolyer.org/
He is a Venture Partner with Accel in London. Prior to this position he spent 20+ years of the career in technical roles.
I think VCs can only benefit from professional diversity. AFAIK, some of the funds even for associate positions they are looking for CS people