At the risk of revealing my naïvete, here are a few things that have really surprised me about the world of running funds and investing in startups 👇
It's crazy how many funds don’t "lead" investments (most). We led or invested solo in 8 of our first 10 of our investments. Never even occurred to me to do it any other way. Why do all the work to raise a fund if you’re not going to be the one to back founders? 🤷♂️
You basically have to be rich (by most people’s definition) to start a fund. You need to be quite willing to work for years without a salary and tolerate a ton of personal risk. Couldn’t have come close without a prior company exit + my wife’s stable job.
So. Many. People. have a well crafted public persona that they write checks, as a fund or an LP, that just… don’t. Don't deploy, control, or even have influence over any capital at all. It’s really bananas.
Service providers (law firms, fund admins, etc) are a big gatekeeper on access to the industry. To get off the ground you frequently need them to make a big bet on you, or do deeply discounted work. Thankful for help from @joewallin, @AngelList, @sunilpai here.
The typical role of investors as gatekeepers has been weirdly reversed in VC. Most _new_ funds are selling the premise of “access”… the best companies are a known quantity, every fund will fight for an “allocation” and they have the ability to get a slice. (Not our model but 🤔)
Will update this thread with inevitably more oddities as the journey progresses.
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