The great debate in #VC “follow-on/pro-rata investing” vs “multiples on dollar invested” continues... #OpenLP -->
.@fintechjunkie wrote a fantastic thread detailing the power of concentrating #vc’s capital into its best companies.
https://twitter.com/fintechjunkie/status/1364641555055837188
.@dunkhippo33 gave great insights into the power of multiples not ownership for smaller funds.
https://twitter.com/dunkhippo33/status/1363272416558944259
From an #LP perspective, we’ve seen both deliver strong (e.g., 3x net) results. The nuances (for us) live in the fund’s size and the quality of deal flow a fund is seeing.
We also believe that a fund’s size highly informs/directs its investment strategy. For example, smaller fund size (e.g., sub $40m) is much more conducive to a higher # of companies/lower ownership strategy than even a $60m size fund.
And as both @dunkhippo33 and @fintechjunkie point out - even in a sub $50m fund, getting to a 3x net - a fund needs multiple 🦄 exits or a decacorn. No easy task!
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