LPs Beware: The “Super Power Law” in Venture Capital
Every few months, a debate resurfaces on social media: Is the Venture Capital power law a bug or a feature of the asset class? This question often overlooks a deeper…
VC Fundamentals
22 posts
Venture Capital Investment Committees: Best Practices From Elite VC Firms
Investment committees are the VC partners’ meetings that make or break deal opportunities. They remain largely secretive in an industry that has opened considerably in the last few years. Like…
VC Funds DPI: How Long Until Venture Capital Delivers Outlier Returns?
Limited Partners evaluating Venture Capital funds expect to see early returns, measured in terms of DPI (Distributions to Paid-In Capital). However, VC funds DPI can take years to materialize. Understanding…
How Liquidation Preference Fuels Conflicts in Venture Capital
Liquidation preference has long been a staple in Venture Capital funding, serving as a financial safeguard for Investors. While it addresses real challenges around risk and financial returns, it’s far…
How VCs Help Founders Optimize Seed & Series A Funding Rounds
Most startup funding roadshows fail because Founders don’t ask for a coherent amount of money from potential Investors. How should you determine how much to raise? This post and the accompanying video training help you size your equity raise correctly.
Startup Valuation: How Venture Capitalists Value Early-Stage Companies
Startup valuation, often seen as more art than science—and sometimes even as black magic—is a process fraught with ambiguity. Unlike mature businesses with years of historical data and steady cash…
The Problem With SAFEs In Venture Capital
In recent years, Simple Agreements for Future Equity (SAFEs) have skyrocketed in popularity, becoming the de facto instrument for early-stage startup investing. While they offer undeniable advantages, such as speed…
How Experienced Venture Capitalists Analyze Startup Financials
Creating startup financials is, despite claims to the contrary, an essential part of the fundraising process. Solid financial projections based on verifiable data serve both entrepreneurs and Venture Capitalists analyzing…
The 3 Investment Criteria Venture Capitalists Use to Screen Deal Flow
Venture Capitalists must use decisive investment criteria when they evaluate deal flow to determine which opportunities to pursue. Making swift go/no-go decisions allows VCs to allocate more time to the…
Anti-Dilution Ratchets in VC Term Sheets: Should Venture Capitalists Enforce Them?
A recent post by a former entrepreneur-turned-VC reminded me of a basic VC term sheet truth: Everything is negotiable. In particular, clauses that don’t work as intended because they target…
Network Effects: What VCs Really Look For (With Case Studies)
I’m often surprised by how little many Venture Capitalists know about network effects. When I ask them to define network effects and explain how to spot whether a startup is…
How Venture Capitalists Evaluate Unit Economics
Unit economics is a term that can ignite excitement or induce confusion in the heart of Venture Capitalists. The ability to accurately evaluate a startup’s potential can mean the difference…
VC Secondaries: Is The Market Ready?
VC secondaries, buying shares in VC-backed startups in the VC secondary market, has become a trending topic in Venture Capital as more industry players strive to get liquidity. Founders, GPs,…
Love At First Click: The Product-Market Fit Metrics VCs Fall For
When legal tech startup Atrium declared bankruptcy after raising $65 million from prestigious Venture Capital firms, including a16z, co-Founder Justin Kan went public with the lessons he learned from the…
ESOP & RSU: How Employee Stock Ownership Plans Should Be Implemented
Employee ownership plans (ESOW) are a cornerstone of motivation and compensation, yet their complexity often presents a significant challenge. Two forms co-exist: Employee Stock Option Plans (ESOP) and Restricted Stock…
Venture Capital Compensation – Goldmine or Gamble?
Understanding how Venture Capital compensation works is akin to deciphering a complex puzzle, with various pieces including salaries, bonuses, carried interest, and attached terms. Factors like seniority, location, firm size,…
“Owning 51% Gives Founders An Illusion Of Control.” – Guy Kawasaki
Guy Kawasaki is one of the most beloved and recognized figures in the startup world. A former Macintosh “evangelist” and Steve Jobs’s right-hand man, he tried his hand at Venture…
Venture Capital Returns: True Lies?
The true performance of Venture Capital is often debated, and myths about it tend to persist despite recent data published by various outlets. Does VC make money as an asset…
How Elite VCs Read Startup Pitch Decks In 3 Minutes
Venture Capital is a high-velocity asset class requiring quick go/no-go decisions multiple times daily. Data reveals that Venture Capitalists typically spend just a few minutes on startup pitch decks, either…
Venture Capital Funds: 5 Questions For Optimal Capital Deployment
Managing Venture Capital funds requires an optimal capital deployment strategy, a multifaceted challenge involving intricate knowledge of economic and structural aspects. While the media often portrays Venture Capital as a…