Thread by @tylertringas

You love supporting entrepreneurs and are intrigued by the mental challenge of investing, so you're thinking about launching a fund. Let me make the case you should NOT launch a standard VC fund and you instead build new models like ours at @earnestcapital 👇

1/ It's going to be really really hard to make money. Valuations in early rounds have been bid up to insane levels by huge multi-stage funds that just view seed rounds as option value to put huge checks in at later rounds.

2/ You don't control your own destiny. Success in the traditional VC model is contingent on other VCs co-investing in your current round and others providing mark-ups by investing in the Series A,B,C...

2b/ Remember when you looked around at the existing VCs and thought "yeaaaa we can do better" and decided to toss your hat in the ring? Well you literally cannot succeed without them agreeing with you in this model.

3/ You really can't be very innovative or non-consensus. For the above reasons you can't actually be contrarian and succeed. Success involves being *just ahead* of consensus not truly bucking it

4/ It's going to take *forever* to make money through carry. VC-backed companies are staying private longer and longer. Enjoy waiting 10+ years before you actually start seeing any real money.

5/ Get ready to go back to high school. The dominant model in VC these days is "access VC" which is not about picking the best companies, but squeezing in an "allocation" into the "hot" deals. An actual thesis is not nearly as important as who you know

Here's why should consider building on the work we're doing at @earnestcapital or try something entirely different

1/ You can actually put entrepreneurs in business. Instead of grabbing a slice of a deal that would have happened whether you existed or not, you can be the person who gets conviction in a founder and writes the check that gets them rolling

2/ You can actually make money. Operating outside the VC paradigm means you're barely ever competing with other investors which means you can simply operate on fair terms for both parties

3/ You can actually be contrarian. Our "first check, last check" model means I could give a hoot what other investors think. On the rare occasion I have to coordinate with other investors, I'm reminded how much it sucks and how much better this model is. earnestcapital.com/fund-2/

4/ You can actually matter. There are too many people already trying to deploy the standard VC model and everything that happens there would have happened with or without your fund. Blaze your own trail! Back founders that wouldn't otherwise get funding! Matter!