Thread by @Darrenlautf

1/ The only reason to join a fund over going angel when you have capital is to build a network. And eventually, you'll be able to spin off on your own.

2/ Most analysts aren't exactly wealthy in terms of crypto, and they also get paid much less than TradFi counterparts despite multiples higher ROI and opportunities.

3/ Funds don't want to pay to retain talent because they've built a brand name in a nascent industry and believe they can bank off that. In TradFi, analyst churn is at a high rate because of an abundance of talent and deep knowledge of the industry's inner workings.

4/ And this knowledge is additionally taught in colleges since a lot of it is decades old.

In crypto, however, expertise and knowledge of a sector is probably held by 100-1000 people tops. It takes years of learning the ins and outs of how things work and grinding on your own.

5/ Yet, if you aren't sourcing the deals and simply DD-ing the various things that come in, you aren't considered as valuable as someone with deal flow (even if they don't know how to analyse it). If you work at a large fund, deal flow is a guarantee.

6/ You don't need to send analysts out to scrounge on twitter to find alpha since everyone wants you on their cap table. Despite this, there's more value in bringing deals to the table rather than knowing how to separate the wheat from the chaff.

7/ And this isn't meant to shit on people with networks and good deal flow. But rather, to bring to light the disparity in "fund perceived talent value" when you have knowledge that <100 have vs having access to deals <100 people have.

8/ Per the way things are going, every analyst at a crypto fund sees themselves as a short-term stop gap. And their goal is to leverage the fund's network to grow their own and eventually spin off to become an angel or set up their own shop.

9/ If crypto funds want to retain talent, they would have to share the fund's upside with these employees. But most don't. So in the next 2-5 years, we are going to see an influx of funds spearheaded by todays "analysts and associates" and they will either:

10/ 1. Be influenced by the greed their early mentors showcased and turn into the very thing they hated.

11/ 2. Understand the goal to building a world class fund is to give employees access to the fund's upside, by giving them carry and eventually making them partners when they prove they're worth their salt (early Andreessen Horowitz model)

12/ h/t to the chad that gave feedback on this, won't name for obvious reasons.

Will most likely write more on this topic if any interest

Btw bumping this

https://twitter.com/Darrenlautf/status/1431522716872417280

, have 50 entries so far but always down to have more.

Adding this as a relevant read for analysts that are thinking of spinning out to start their fund - @mrjasonchoi wrote about angel investing vs starting fund

https://twitter.com/mrjasonchoi/status/1421769966689210368