Applies equally to tech investing, and I think LPs should probably just stop requiring particular numerical targets for GP contribution.
(This norm also has terrible distributional consequences for emerging managers.)
(This norm also has terrible distributional consequences for emerging managers.)
https://twitter.com/sweatystartup/status/1489423732133318660
The norm is that you put up, say, 2% of the money in a fund, which is very plausibly more than the net worth of many early career tech professionals if they didn’t come from money.
Historically, most VCs didn’t have a problem with that. However.
Historically, most VCs didn’t have a problem with that. However.
As a (tiny) LP, I tell fund managers “Not going to ask and you don’t have to tell me; I know this is your main career focus for next 10+ years. If I didn’t trust you to care about that more than you care about money, we would not be here.”
I would note that there are banks which specialize in giving new fund partners loans so that they can make this commitment, which a) that seems like a good patch for people who can qualify for loans but b) that removes a lot of the skin-in-the-game argument, right.
(I don’t know whether those loans are formally no-recourse or not but suspect expectation is they get paid back ~100% of time so who cares.)
• • •
Missing some Tweet in this thread? You can try to
force a refresh
