In the world of VC, the savvy never count their chickens till they are hatched. Or calculate returns till you have moolah in the coolah. But others are more than glad to do it for them. They count your unhatched eggs and rank chicken farmers based on their “unhatched” chicken count. But wait, you ask — how can you do that? Those chickens have not hatched yet. And therein lies the conundrum of measuring VC returns. So why do we even measure what’s un-necessary, even inane?  Read the rest of this post on Medium ..read more

At a recent talk, Ajay Royan, Co-founder of Mithril Capital elegantly debunked the first mover advantage in startup investing. “Paypal, Facebook, Google, Airbnb, Uber — none of these companies were first movers. Rather, these companies did one thing really well — they shut the door behind them. The rest is history.”  Read the rest of this blog on Medium ..read more

tl;dr — VC is stasis. Changing. Slowly. Will we see a punctuated equilibrium?  A recent New Yorker article quoted Marc Andreessen, who asked Ben Horowitz — “What if we’re the most evolved dinosaur, and Naval [founder of AngelList] is a bird?” Can an upstart like AngelList disrupt the business of venture capital ? Software is eating the world, as A16Z’s tagline goes. And so, will it eat venture capital? Huoy Ming Yeh, Founder of CSC Upshot Ventures and I were recently invited by “Founders & VCs” to discuss the future of venture capital. We discussed dinosaurs, VCs, angels and entr ..read more

If it takes $10 million to make a good VC, that $10 million better come from the LP next door - Anonymous LP Fund due diligence is much like startup diligence. It's about the team and strategy. And the odds are the same - LPs source a thousand fund opportunities, invest in a dozen, and get returns from a few. For LPs, due diligence begins and ends with the fund's investment team.  The one question LP seeks to answer - Can this team generate strong returns?   Top-quartile managers with demonstrated & repeatable track records over fund cycles are sought after. Y ..read more

Some large, really large institutional investors (like pension funds and endowments) invest in venture capital funds using an indirect investment approach. They pick an intermediary - a Fund-of-Funds -  as opposed to investing in VC funds directly. Now the obvious question is why do smart, institutional investors bother adding a layer in this mix? After all, they could bypass this step and invest in VC Funds directly. The fund-of-funds model (FoF) emerged in the late 1980s to meet the asset allocation and diversification demands of larger financial institutions. OK, let's t ..read more

Capital flows into venture capital funds from limited partners (LPs) such as pension funds, university endowments, foundations, finance companies, and high-net-worth individuals. In this post, I'll attempt to describe each LP and how they look at VC. If you are raising a fund, this can help you to understand LP profiles, their constraints and identify which LP may be best suited for your fund. While pension funds are the largest contributor, these are also conservative with respect to VC allocations. Endowments and foundations are comparatively more aggressive and allocate larger portions to V ..read more

Terry McGuire, a venture capitalist of 25 years and chairman emeritus of National Venture Capital Association, is the co-founder of Polaris Ventures, a firm that manages $3 billion and has invested in over 100 companies. After college, he spent a year in Ireland and learned to speak Gaelic. Co-incidentally, at his first job interview at a Chicago-based venture firm, the interviewer spoke fluent Gaelic. As the interviewer walked in, he softly muttered, "An bfhuil se fluic, amach?" which is Gaelic for "Is it wet outside?" Terry promptly responded in Gaelic. The two hit it off, and Terry landed t ..read more

Should you get an opportunity to sit down for an interview with a partner in a venture fund,  here is a list of points for any interview  - as they say, Success = Opportunity + A Prepared Mind.  •    Research the venture firm’s profile. Understand the sector and stage of investments, assets under management and its latest fund size. •    Look up the key portfolio companies and map their progress. Have these companies signed up strategic partnerships? Have they raised follow-on rounds of capital? How do they compete with others? •  ..read more

Capital flows into venture capital funds from pension funds, university endowments, foundations, finance companies, and high-net-worth individuals.  Such investors in venture funds are called limited partners (LPs). The word "limited" asserts their passive role with 'limited' say in a fund's operational activities.  LPs  include institutional investors (e.g., pension funds, foundations, endowments, banks and insurance companies) and family offices and high-net-worth individuals (HNWIs). The bulk of capital for venture funds comes from pension f ..read more

  It's too complex and trying to use any classical or logical frameworks are inadequate. It boils down to the ability to pick "good" investments. The ability to pick the good investments typically comes after making a lot of bad investments. Like good judgment, which comes from experience, and experience comes from bad judgment. Some attributes that define good practitioners include: § Student of Market Trends: The foremost and primary criteria, a practitioner’s ability to understand how markets are evolving, and where investment opportunities lie is the essence of this business ..read more