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The Lost Art of Early Stage Venture Capital
Venture capital is undeniably a subset of private equity. However, approaching the industry from that perspective ignores the vast majority of what VCs actually do: bring new technologies into the world by helping build companies, from tiny startups with a couple of cofounders to potentially hundreds of employees and millions of customers.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
Due to the fund economics of early stage investing it may not make sense to do a pro-rata, or follow-on investment with a $5M Series A in order to maintain our 20 percent. As the entrepreneur continues to raise capital, the early stage investors will continue to experience a valuation dilution or divergence in their investor shares, effectively cha
... See moreBradley Miles • #BreakIntoVC: How to Break Into Venture Capital And Think Like an Investor Whether You're a Student, Entrepreneur or Working Professional (Venture Capital Guidebook Book 1)
Splitting the investment across multiple rounds is helpful in two ways: risk mitigation and opportunism.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
But I thought a better way of thinking about how we manage our portfolios is to think about it as a funnel. If we do 36–40 deals in a Seed Fund, somewhere between 25–40% would likely see big up-rounds within the first 12–24 months. This translates to about 12–15 investments.