The Experience of Being a Limited Partner in Venture Capital

This is going to be BIG.

Either way, VC funds aren't really built around creating much of an experience for their Limited Partners. Rather than see LP interactions as a chore or a burden, new fund managers should see this as an opportunity to extend the community around their fund. Partnership investing is boring. You give someone your money and, once a quarter, they give you a report that says what they did with your money.

Investing in Venture Capital - Limited Partner or Fund of Funds? - Part 2

Recent Buzzes - VC Experts, Inc.

By Igor Sill, Managing Director of Geneva Venture Management LLC. Essentially, FoFs can offer an investor access to the very best performing Venture Capital fund Managers not otherwise accessible directly. Sill, Managing Director, igor@genevavc.com.

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Investing in Venture Capital - Limited Partner or Fund of Funds? - Part 1

Recent Buzzes - VC Experts, Inc.

By Igor Sill, Managing Director of Geneva Venture Management LLC. Billion represents a significant liquidity window for Venture Capitalists and their Limited Partner investors. Portfolio managers should fear failure, not illiquidity.

Managing Investor Pedigree

StartupCFO

Cambridge Associates , an advisor to the Limited Partners that invest in venture capital firms, says that only about 20 firms – or 3% of all firms – generate 95% of the industry’s returns. . The post Managing Investor Pedigree appeared first on StartupCFO : Mark MacLeod. It’s a known fact that not all venture firms are created equal.

A brief history of your investors (and their investors)

Venture Hacks

Thanks to George Zachary , a partner at Charles River Ventures , for sponsoring Venture Hacks this week. So you know what questions to ask your potential investors about their investors (their limited partners ). Venture capital firms have limited partners.

How We Think About Values Versus Deeply Held Beliefs

Feld Thoughts

” Each of our funds is $225 million, we have four partners and no other investment staff, and we work out of the same office we’ve worked out of since we started in 2007. Until we created this fund, we limited the amount that we could invest in a company to $15 million. With Select, we are no longer limited to investing $15 million per company. Management culture deeply held beliefs fg angles foundry group select matt blumberg return path values

What Founders Need to Know: You Were Funded for a Liquidity Event – Start Looking

Steve Blank

VC’s raise money from their investors (limited partners like pension funds) and then spread their risk by investing in a number of startups (called a portfolio). BTW, Angel investors do not have limited partners, and often invest for reasons other than just for financial gain (e.g.,

The LP Opportunity to Change Tech Culture

thebarefootvc

Limited partners (LPs), who manage the capital that gets deployed into venture capital funds, can play an important role in diversifying the funding landscape. Limited partners are pension funds, university endowments, funds of funds (who get their money from pension funds), family offices and foundations. The reality is that many underrepresented fund managers start off with small funds and go through several fund cycles to build to a $100M fund.

LP 23

What’s a typical day like for a full-time angel investor?

Gust

If you mean someone investing mostly other people’s money through a seed fund, they are venture capitalists, and their days are spent like other VCs, meeting with prospective investments, mentoring portfolio companies, raising money from limited partners, negotiating deals, and so forth. There is no such thing as a full-time angel investor (or if there is, I’ve never met one.).

Katie Rae and the Engine at MIT

David Cohen

Katie was the Managing Director at Techstars for our Boston program from 2010 to 2014. We became a Limited Partner in Project 11 when it launched and Katie continues to mentor at Techstars regularly. Everyone who knows Katie Rae at Techstars is thrilled that she’s taken a lead role with The Engine at MIT, a new venture fund and incubator space there.

Similarities between raising a venture fund and raising for a startup

The Equity Kicker

I’m at the Super Investor conference in Amsterdam, which is the main event each year when private equity and venture capital fund managers and their investors (Limited Partners out LPs) get together.

Entrepreneurs Teach VCs to be VCs

A VC : Venture Capital and Technology

They taught me a lot about finding and researching opportunities, structuring deals, managing a fund, and working with limited partners.  So it is the entrepreneurs I worked with in the first five years I was a partner, people like Isaak, Ron Schreiber and Jordan Levy, Mark Pincus and Sunil Paul, and Seth Godin that I have to thank for teaching me how to do what I do. Isaak Karaev stopped by and left a comment in yesterday's thread.

How do venture capital firms make money by investing in startups?

Gust

The general partners of a venture capital fund make money… …by raising the bulk of the capital that the fund’s investable capital from “Limited Partners”, usually institutions such as university endowments, insurance companies and pension funds. In addition, every year, the managers of the fund (the GPs), are entitled to pay themselves 2-3% of the total amount of the fund to pay their expenses and salaries. (In

Let Your Winners Run

A VC : Venture Capital and Technology

The entrepreneur and her management team generally makes that call and the board is asked to ratify it. But I am fairly sure that my partners and I and our limited partners will be happy to let this fund play itself out over a longer period of time. I met with a group of very experienced and sophisticated investors yesterday who make up the investment committee of a large charitable foundation that is an investor in USV.

How long does it take for investors to approve the idea and to grant the necessary investment?

Gust

Instead, they have a limited amount of money entrusted to them by limited partners, and they invest in a very, very few companies each year. Now, with that as background, it will typically take one to three months to negotiate and diligence a venture investment, if the company manages to get one at all. The question is based on a misunderstanding of how venture capital investment works. First of all, VC funds do not invest in ideas.

CasaSiegel: Timeless learnings

CasaSiegel

With the support of some key Limited Partners (LPs), our second fund is already larger than our first, and we will thus have the ability to execute on the strategy of investing in breakthrough technologies that come from major research institutions and to deliver venture-level returns. 5) Keep Your Eye on the Prize – The partners at X/Seed will not generate wealth for our selves via our management fees. CasaSiegel.

There are no shortcuts to intelligent Founder – CEO transitions

Fred Destin

Founder transition is one of those tense topics that holds limited upside for the writer, especially when said individual is a venture capitalist. We always look for experienced management [as soon as a company starts to scale]". Can you manage salespeople ?

Top 100 venture VC investments each year average $100-150m gain

The Equity Kicker

Cambridge Associates is a service provider to the Limited Partners that invest in venture capital funds that’s known for the quality of its research. That’s the Forward Partners way.

Why the LP Outlook is Good for Venture and Startups in 2017–2020

Both Sides of the Table

Every year Upfront Ventures surveys Limited Partners (LPs) who are the main source of capital that invests in VC funds and thus the main source of capital that goes to startups to get an early-warning sense of the year ahead, leaving aside any Black Swans.

LP 77

Blue Collar VC

Mucker Lab

Just as entrepreneurs should aspire to raise capital from value-added, “smart money” investors, we, too, have focused on partnering with committed, long-term, institutional limited partners (LPs). We’ve written code, launched products, acquired users, managed P&Ls, and lost sleep over making payroll. We’ve been on founding teams and worked from entry level through executive management. We are consumed with generating great returns for our limited partners.

When Does a Seed Stage Company Need a Board with More Than Just the Founder?

ithacaVC

One final thought – what about the VC’s fiduciary duties to its own investors (called limited partners). It is reasonable to think that the limited partners would expect their money managers (i.e., I think many limited partners would answer “yes” Love to hear your thoughts on this. Board of Directors Dealing with VCs Management Startup Life

Non traditional venture investors are still getting to grips with startup investing

The Equity Kicker

Against this backdrop the folks at Industry Ventures, a Limited Partner that invests in VC firms, spoke with 40 mutual fund and hedge fund managers to find out what they are thinking.

Valuation vs Ownership

A VC : Venture Capital and Technology

It's the limited partners who get screwed by this stuff. And the firm offering $5mm for 20% will likely have a $500mm fund size (or more) and will be making $10mm or more per year in management fees. I am talking at the PreMoney conference today (via Skype) and I woke up thinking about the challenges facing the VC industry. I hope to talk a bit about this at the conference. Some investors are ownership focused.

Writing Checks Doesn't Make You an Investor

This is going to be BIG.

You might work with the same group of investors, contractors, agents and management companies for decades. If you're a VC, you should do whatever you can to make your limited partners feel like investors. I met with a family office investor yesterday and we were talking about his family's interest in diversifying their investments into early stage companies.

Ready to Join a New Management Team? Here’s How to Do Your Due Diligence First

David Teten

So I put together some notes on how to due diligence a management team, from the point of view of a prospective colleague. Brad’s colleague Linkel Eakman, a prominent limited partner, published his guide: A Human User Interface….with MANAGEMENT DOMAINS. In theory the CEO controls everything, but in practice that’s never the case (except with a true micro-manager, whom you don’t want to work for). The post Ready to Join a New Management Team?

Where Does VC Money Actually Come From? [Flowchart]

View from Seed

This post was originally published on the personal blog of NextView founding partner Lee Hower. Most of the dollars a VC firm invests come from outside limited partner investors (LPs). Lee’s posts also appear regularly on View From Seed. Subscribe here for more.

LP 155

Where Do Venture Capital Dollars Actually Come From? This Visual Explains

Agile VC

Most of the dollars a VC firm invests come from outside limited partner investors (LPs). Some institutional investors simply aren’t big enough to have in-house employees to vet and manage a portfolio of VC funds.

Announcing K9 Ventures III, L.P. – A $42M technology-focused Pre-Seed fund

K9 Ventures

I’m grateful to have had the opportunity to work with some absolutely amazing founders in the K9 portfolio and look forward to the many more amazing founders that K9 will get to partner with. I would like to thank all the limited partners who entrust me and K9 to invest their capital.

LP 34

Why You Don’t Want to Give Financial Information to All of Your Investors

Both Sides of the Table

I am generally a fan for providing management updates periodically for all investors but in doing so you must assume that what you send out will get read by others and thus hold back on your most sensitive information. This investor decided to use the fact that they got into a company that appears to be doing well to their benefit to almost fraudulently persuade limited partner investors to give them money. We all know that funding markets have changed for startups.

SEC 109

Investor Nomenclature and the Venture Spiral

K9 Ventures

They are still individual investors, they invest on a full-time basis as professionals, but they have funds with Limited Partners. The limited partners may themselves run the gamut from individuals, family offices, venture capital funds to institutional LPs.

The Perception Of Conflict Is Conflict

A VC : Venture Capital and Technology

Our shareholders are our limited partners. And managing that is the most important thing of all. VC is a service business like law firms and ad agencies. Our customers are the entrepreneurs we back. When we do a good job of helping our customers create value, our shareholders benefit. But, like law firms and ad agencies, it is hard to provide truly objective and unbiased advice when you have a conflict of interest.

Why Big IPOs Mean More Money for Your Startup

Inc Startups

Well, venture funds get the money they use to invest from so-called limited partners--pension funds, insurers, endowments, and other institutional investors. For the limited partners, venture capital is considered a risky asset class.

The Changing Structure of the VC Industry

Both Sides of the Table

15 years ago we were at the peak of Internet hype with the launch of many over-capitalized businesses with a market size & opportunity was limited. There has been much discussion in the past few years of the changing structure of the venture capital industry.

What Do LPs Think of the Venture Capital Markets for 2016?

Both Sides of the Table

At the Upfront Summit in early February, we had a chance to have many off-the-record conversations with Limited Partners (LPs) who fund Venture Capital (VC) funds about their views of the market. We’ve also become very adept at partnering with seed funds.

Five Lessons Learned Getting to a Second Fund

This is going to be BIG.

Today, I'm happy to announce that Brooklyn Bridge Ventures, the firm I founded and continue to run as the sole General Partner, has raised a second fund, totalling $15.1 There are some things I learned about running a first fund over and above finding great companies that I think are important for new managers to keep in mind: 1) Venture capital will be humbling.

The Economics of a Small VC Fund

This is going to be BIG.

management fee. It''s only a little bit of a performance drag, though, because management fees act like a loan. You charge your limited partners this, but you have to pay it back before you start taking a cut of the profits. Over time, when I raise the second and third fund, those fees will ramp down in the out years, but I''ll still have two funds worth of management fees to run with. Two years ago I started a fund.

Recycling: The challenge and the opportunity for a Seed stage VC

Information Arbitrage

When Limited Partners (LPs) invest in a venture fund, they agree to pay an annual Management Fee on committed capital, usually on a declining scale over a 10 year period. In total, these fees amount to around 20% of an investors’ commitment, which implies that LPs only get to put 80% of their investment dollars to work because of management fees. My recent post gave rise to a host of questions around the issue of recycling. What does it mean? How do you do it?

Why Was Winter in Venture Capital Funding so Short?

Both Sides of the Table

In case you’re keeping score at home — that’s approximately the size of 65 US seed-stage funds managed by one company. It was only a year ago that many in the Venture Capital industry were predicting that “winter was coming” and to be fair the author of this post was chief amongst them.

Angel Investing: Know (What Motivates) Thyself

Agile VC

As a VC investing not only personal capital, but on behalf of limited partners, one can’t take this strategy. My NextView partners & I have a fiduciary responsibility to invest and manage our LPs money… we cannot look them in the face and tell them “We lost a ton of dough on a bunch of companies, but man… we learned a bunch along the way.” I was recently talking with another member of LinkedIn’s founding team.

The Myth of the Top Investor

This is going to be BIG.

It means that if you ever have an opportunity to be a Limited Partner in Sequoia, and to do so over multiple funds--with a very long term (20+ years) time horizon--you should probably do it. It also doesn't mean that, if you're an entrepreneur, they're the right partner for you. They simply can't manage deals that small on a regular basis because of the time and effort for the amount of money at stake.