General VC Questions

Convertible notes sometimes include a conversion discount, which enables the investor to convert their debt into equity at a lower valuation then new investors in the subsequent financing round. SAFE notes also sometimes include a discou...

Convertible notes sometimes include a conversion discount, which enables the investor to convert their debt into equity at a lower valuation then new investors in the subsequent financing round. SAFE notes also sometimes include a discount rate which provides investors with a lower price per share upon conversion.

Pitchbook does not have accurate data for early stage funds or startups. Avoid them. Neither do some of the other sources you mentioned. To get more accurate information on trends, specialize in areas of focus and find industry publicati...

Pitchbook does not have accurate data for early stage funds or startups. Avoid them. Neither do some of the other sources you mentioned. To get more accurate information on trends, specialize in areas of focus and find industry publications and data. In addition, check the blog on govclab.com for VC related trends. 

It is generally not recommended for an LP to also be a Venture Partner - it could introduce conflicts of interest but the LP may also lose their "limited" status and corresponding protection from liability in the case an LP is involved i...

It is generally not recommended for an LP to also be a Venture Partner - it could introduce conflicts of interest but the LP may also lose their "limited" status and corresponding protection from liability in the case an LP is involved in decision-making for the Fund. 

Hi John, in that situation you can manually move them to the appropriate stage in the closing pipeline. This can be done by checking the box next to the LP's name and changing their stage or by simply clicking on the dropdown menu button...

Hi John, in that situation you can manually move them to the appropriate stage in the closing pipeline. This can be done by checking the box next to the LP's name and changing their stage or by simply clicking on the dropdown menu button underneath the column 'STAGE' and changing the stage.

In my view, it's your job as VC to help your company. If you have expertise in this area, just help them without charging them. It's part of your value add.  It is a bit of a conflict if you charge them and it may require some sort of d...

In my view, it's your job as VC to help your company. If you have expertise in this area, just help them without charging them. It's part of your value add.  It is a bit of a conflict if you charge them and it may require some sort of disclosure. 

In your thesis statement you should say where you're located. In your case, you can say that you're in Milan or in Italy. 

In your thesis statement you should say where you're located. In your case, you can say that you're in Milan or in Italy. 

As a VC, you must get preferred shares. This is sort of non-negotiable. Common is significantly less valuable because it has no preference. Unless the founder will do all future financings via common, which is highly unlikely and creates...

As a VC, you must get preferred shares. This is sort of non-negotiable. Common is significantly less valuable because it has no preference. Unless the founder will do all future financings via common, which is highly unlikely and creates future financing risk for the company because future VCs will likely not invest, you need to ensure that your investment either converts to preferred shares via a SAFE or Convertible note, or directly acquires preferred shares. 

Venture Investors typically take preferred positions in portfolio companies. The early stage investment agreements are fairly standardized. For a review of a standard preferred offering, review the Series Seed documents below: https://w...

Venture Investors typically take preferred positions in portfolio companies. The early stage investment agreements are fairly standardized. For a review of a standard preferred offering, review the Series Seed documents below: https://www.seriesseed.com/ 

HI Revi, thanks for reaching out. There are two options in Hub to email a group of people: -1. In the respective pipeline where your team members are housed click on "Send email" for a prospect that is one of your teammates, then clic...

HI Revi, thanks for reaching out. There are two options in Hub to email a group of people: -1. In the respective pipeline where your team members are housed click on "Send email" for a prospect that is one of your teammates, then click on the +CC and BCC button in order to add the rest of your team members in the CC field. Always make sure that the email is coming from you by selecting your email address in the "From" section. -2. Alternatively you can email a group of people, in this case your team members, at once by selecting up to 50 prospects at a time in the pipeline by using the checkboxes next to their names in the stages/prospects list. After selecting them / checking the boxes next to their names, a green bar at the top of the screen will appear that includes "Send Email", click on it to proceed. If things are still unclear or if you prefer me to walk you through this in person, I am happy to do so over a Zoom call. Here is my calendly: https://calendly.com/rjn-1/30min

You can, but you will need LPAC approval. 

You can, but you will need LPAC approval. 

For your liquidity scenarios, it's not necessary to distinguish between M&A and IPO. Build your liquidity scenario based on the exit value. In other words, if a high exit is $1b in your model, just put a footnote that it could be derived...

For your liquidity scenarios, it's not necessary to distinguish between M&A and IPO. Build your liquidity scenario based on the exit value. In other words, if a high exit is $1b in your model, just put a footnote that it could be derived via an M&A or an IPO.

It is recommended that managers continue to source and assist Rockstar CEOs to invest in while working to close a fund. The ideal situation is to help startups aligned with your Thesis for four to six months before they need capital, and...

It is recommended that managers continue to source and assist Rockstar CEOs to invest in while working to close a fund. The ideal situation is to help startups aligned with your Thesis for four to six months before they need capital, and then, when they need capital, your fund is closed and ready to invest. Since closing a fund is time consuming with a lot of uncertainty, it is recommended that you do not make any promises about funding or the timing of funding to any startups that you are helping, especially before your fund is closed.

Sovereign wealth funds are commonly prohibited from investing in new managers or emerging managers, and they typically have long and complicated investment approval processes that can take months or years. In addition, they are known to ...

Sovereign wealth funds are commonly prohibited from investing in new managers or emerging managers, and they typically have long and complicated investment approval processes that can take months or years. In addition, they are known to ask for side letters on investment focus and special economics. As a general rule, it is recommended to avoid pitching them until the fund have a proven track record and can negotiate from a position of strength. 

The vast majority of brand name enduring VC firms were once 'micro' VCs as well. Sequoia's first fund was $3m. What's different today is that there is a Cambrian expansion of startups globally outside of the traditional hubs. As a result...

The vast majority of brand name enduring VC firms were once 'micro' VCs as well. Sequoia's first fund was $3m. What's different today is that there is a Cambrian expansion of startups globally outside of the traditional hubs. As a result, a lot of new VCs are being founded to meet the demand. Many of these new micro VCs, especially alumni of the VC Lab program, are founding their firms with the correct structure, strategy and principles to become the leading enduring brands in their sector or geography. 

DAOs are NOT beginning to play a bigger role in the venture eco-system as of this message, and it's unclear if they will ever become a mainstream financing alternative.  If a startup has a DAO on their cap-table, you may want to diligen...

DAOs are NOT beginning to play a bigger role in the venture eco-system as of this message, and it's unclear if they will ever become a mainstream financing alternative.  If a startup has a DAO on their cap-table, you may want to diligence why the startup had to take money from the DAO and if they received any special terms. 

It may be possible for you to get a loan for this matter. There are providers that have portfolio lines of credit products that may work in this situation. 

It may be possible for you to get a loan for this matter. There are providers that have portfolio lines of credit products that may work in this situation. 

There are number of factors that are contributing to this phenomenon, including: • VC has number of different funds that invest at various stages. To make things more confusing, there are also a number of PE style investors that have ent...

There are number of factors that are contributing to this phenomenon, including: • VC has number of different funds that invest at various stages. To make things more confusing, there are also a number of PE style investors that have entered the asset class as late stage investors. The later stage VCs have raised mega funds in the $1b+ range and they have a very different strategy then new managers with $5m funds. Though the market correction primarily affected large legacy VCs, folks that are not well versed on the asset class like journalists, lump the whole market as whole.  • There are a number of old VCs that primarily invested in very developed eco-systems like Silicon Valley who don't have access to new sectors like emerging markets, under-represented founders etc... These folks struggle to see or take advantage of the vast opportunities. Therefore, when journalists ask their opinions, they often will respond with a statement like: 'the market can't support that many VCs'. • The VC asset class in general does not have a great reputation in areas such as diversity and ethics. However, during the market expansion, many of these issues were masked by the performance of VC portfolios.  That being said, there is a whole new breed of ethical venture capitalists who are abiding by the Mensarius Oath that are turning the VC asset class into a force for good in the world.  The biggest risk to venture capital are regulations that are not well thought out by the governing bodies like we see in Europe today, as well as global conflict. 

You may find this thread helpful. Since this is such a general question, it's very complicated to answer it. A biotech company will have different risks and opportunities vs SaaS. A pre-seed company will much riskier then a Series-B comp...

You may find this thread helpful. Since this is such a general question, it's very complicated to answer it. A biotech company will have different risks and opportunities vs SaaS. A pre-seed company will much riskier then a Series-B company. 

No there is not. Venture Capital has historically been a very opaque industry where it's very difficult to obtain information. 

No there is not. Venture Capital has historically been a very opaque industry where it's very difficult to obtain information. 

No, there is not a limit to the number of venture partners in a venture capital fund. However, the more VPs the more challenging it is for the GPs to manage them. As a result, it's sub-optimal to have a lot of VPs for new or emerging fir...

No, there is not a limit to the number of venture partners in a venture capital fund. However, the more VPs the more challenging it is for the GPs to manage them. As a result, it's sub-optimal to have a lot of VPs for new or emerging firms. 

This is private information and we can not disclose this information. 

This is private information and we can not disclose this information. 

Decile Launch supports Delaware and Ontario as of this message but we are reviewing other domiciles for future expansion. Please review why Delaware is the domicile of choice for the vast majority of VC Firms here: https://govclab.com/20...

Decile Launch supports Delaware and Ontario as of this message but we are reviewing other domiciles for future expansion. Please review why Delaware is the domicile of choice for the vast majority of VC Firms here: https://govclab.com/2023/06/10/delaware-is-the-vc-domicile-of-choice/

We will not see major changes in the VC model. The traditional 2 and 20 model works really well for venture capital and LPs are slow to adapt to changes in structure. 

We will not see major changes in the VC model. The traditional 2 and 20 model works really well for venture capital and LPs are slow to adapt to changes in structure. 

You can use whatever tool you want for this task. 

You can use whatever tool you want for this task. 

Decile AI - "Yes, the fund in a venture studio can be used to test out ideas. This process involves deploying capital for market feedback before identifying the best ideas or models for larger investments. This approach is different from...

Decile AI - "Yes, the fund in a venture studio can be used to test out ideas. This process involves deploying capital for market feedback before identifying the best ideas or models for larger investments. This approach is different from a traditional VC fund, which typically invests in startups without this preliminary testing phase."

Great question, and I think the answer can vary depending on the stage at which the company is at. In other words, the metrics for a pre-seed/seed stage company will differ vastly from a more mature, Series C/D company. I think at the ea...

Great question, and I think the answer can vary depending on the stage at which the company is at. In other words, the metrics for a pre-seed/seed stage company will differ vastly from a more mature, Series C/D company. I think at the early stage, there should likely be an emphasis on product market fit, execution velocity, the quality of the team, etc. At the later stage once revenue has been established, one can examine things like company burn rates, customer acquisition costs, revenue per employee, and conduct a more sophisticated analysis on revenue as it relates to different product streams. I hope this helps! 

There is little impact to Venture Capital from alternative investment models. 

There is little impact to Venture Capital from alternative investment models. 

Read this article: https://govclab.com/2021/10/28/venture-capital-roles/ 1. It's VERY difficult to become a GP in a fund, even for those who are experienced investors. It's typically easier to start a Firm then to join one at as a GP wh...

Read this article: https://govclab.com/2021/10/28/venture-capital-roles/ 1. It's VERY difficult to become a GP in a fund, even for those who are experienced investors. It's typically easier to start a Firm then to join one at as a GP which is a very senior role. Some, firms do have a career trajectory for junior people. But even for those firms, this typically takes 10-15 years to ascend to GP role if everything goes well. 2. Venture Partners are part time roles. These are typically reserved for part-time team members who can provide strategic, operating and portfolio support. Venture Partners are typically experts in a field like souring, domain, limited partners etc... 3. Operating Partner / COO at VC Firm - The vast majority of VCs don't have this role because they are too small. However, there are several enduring large firms with a high AUM, where this role is necessary. There are several ways to get experience for this role: 1. Join a company that managers operations for lots of VC Firms, like Decile Group 2. Join a new or emerging firm at an entry level role and learn the business together with the firm. 3. Join an accelerator like Venture Institute to rapidly develop the foundational skills.

Venture capitalists add value to startups in multiple ways beyond just providing capital. They offer strategic guidance, share industry expertise, and leverage their networks to help startups forge new partnerships and identify potential...

Venture capitalists add value to startups in multiple ways beyond just providing capital. They offer strategic guidance, share industry expertise, and leverage their networks to help startups forge new partnerships and identify potential customers. Additionally, VCs can assist with hiring, as they often have access to an extensive pool of talented professionals. Additional reading: https://govclab.com/2021/11/19/the-venture-industry-explained/ https://govclab.com/2023/06/14/the-role-of-venture-capital/

General Partner (GP): In the context of venture capital funds, the general partner is the fund manager responsible for making investment decisions, managing portfolio companies, and overseeing the fund’s operations. GPs typically receive...

General Partner (GP): In the context of venture capital funds, the general partner is the fund manager responsible for making investment decisions, managing portfolio companies, and overseeing the fund’s operations. GPs typically receive management fees and a share of the fund’s profits (carried interest) as compensation for their services. Limited Partner (LP): An investor in a venture capital fund who contributes capital but does not participate in the fund’s management or investment decision-making process. Limited partners have limited liability, meaning their financial exposure is restricted to the amount of capital they have committed to the fund. They share in the fund’s profits in proportion to their investment, after the deduction of management fees and carried interest. You can find more info here: https://govclab.com/2023/04/26/how-to-invest-in-vc/

30% of new managers are former Founders or CEOs according to VC Lab's most recent report. You can find more information here: https://govclab.com/2023/02/17/nextgen-manager-report/

30% of new managers are former Founders or CEOs according to VC Lab's most recent report. You can find more information here: https://govclab.com/2023/02/17/nextgen-manager-report/

You can get sued for anything, especially if you reside in a litigious country or domicile. Typically, it's best to try to avoid combinations if the names are very common because other parties may raise trademark concerns.

You can get sued for anything, especially if you reside in a litigious country or domicile. Typically, it's best to try to avoid combinations if the names are very common because other parties may raise trademark concerns.

There are a number of female VCs on the Midas List: https://www.forbes.com/sites/truebridge/2022/04/12/midas-list-2022-top-female-investors/?sh=b3fd17b46b2c

There are a number of female VCs on the Midas List: https://www.forbes.com/sites/truebridge/2022/04/12/midas-list-2022-top-female-investors/?sh=b3fd17b46b2c

Yes it is and you should change you name. Even if you could technically win a legal dispute, the effort and the cost would not justify it.

Yes it is and you should change you name. Even if you could technically win a legal dispute, the effort and the cost would not justify it.

Generally speaking, an SPV should not be used for deal warehousing. While there are ways in which it may be technically possible, it complicates matters (for the Fund) and is sub-optimal. Fund managers commonly make initial investments...

Generally speaking, an SPV should not be used for deal warehousing. While there are ways in which it may be technically possible, it complicates matters (for the Fund) and is sub-optimal. Fund managers commonly make initial investments either as individuals, or via wholly-owned entities such as LLCs (in the US). There are no particular issues or concerns with investing via an LLC versus investing as an individual. However, it is important to note that the initial investment paperwork issued to the LLC (or the individual for that matter) should be issued cleanly/completely and reflect the LLC's correct name, to ensure there are no additional complications when it comes time to transfer the warehoused deals into the Fund. 

Some of the benefits for a venture studio to have a fund and the structure is covered in this article here: https://govclab.com/2023/04/25/how-to-build-a-venture-studio/ Inevitably, almost all successful venture studios will have a fun...

Some of the benefits for a venture studio to have a fund and the structure is covered in this article here: https://govclab.com/2023/04/25/how-to-build-a-venture-studio/ Inevitably, almost all successful venture studios will have a fund, since this allows the venture studio to scale in a more structured and thoughtful way. The fund allows the venture studio to control their own destiny by backing the best outputs with more capital and, possibly, through multiple funding rounds. Since the outcome is inevitable to have a fund, then it makes often to start with a fund or to launch a fund early in the process.

A type of loan offered by banks and nonbank lenders that is designed specifically for early-stage companies with venture capital backing.

A type of loan offered by banks and nonbank lenders that is designed specifically for early-stage companies with venture capital backing.

National Venture Capital Association https://nvca.org. They provide a comprehensive set of model documents intended to streamline VC transactions. Membership also provides other benefits, like a limited subscription to PitchBook (otherwi...

National Venture Capital Association https://nvca.org. They provide a comprehensive set of model documents intended to streamline VC transactions. Membership also provides other benefits, like a limited subscription to PitchBook (otherwise $20k/year for unlimited per firm).

We do not, however, I’m happy to share in our Alumni Slack channel for you. Send me your question and I’ll post it for you.

We do not, however, I’m happy to share in our Alumni Slack channel for you. Send me your question and I’ll post it for you.

This will help: Venture Partners are part time people that can help with sourcing or fundraising

This will help: Venture Partners are part time people that can help with sourcing or fundraising

It really depends on the stage of the startup. There are number of AML providers, including Plaid and Sumsub. That being said, many of these solutions are cost prohibitive for pre-seed stage startups.

It really depends on the stage of the startup. There are number of AML providers, including Plaid and Sumsub. That being said, many of these solutions are cost prohibitive for pre-seed stage startups.

An SPV is a non-blind vehicle that contains one deal. A venture fund is a blind pool, the limited partners do not know what deals are going to be invested in, that contains a diversified set of portfolio companies, usually 10 to 25. Th...

An SPV is a non-blind vehicle that contains one deal. A venture fund is a blind pool, the limited partners do not know what deals are going to be invested in, that contains a diversified set of portfolio companies, usually 10 to 25. The fees are normally much smaller for SPVs, which make then attractive to limited partners. SPVs end up being a distraction to venture capitalists looking to set up a venture capital firm, since they are not real venture funds and since the economics are small.

The link that you shared describes everything about For Progress. It provides startup and investment related metrics based on the 169 official SDG sub-goals. The full set of metrics is outlined here: https://govclab.com/2023/05/23/ventu...

The link that you shared describes everything about For Progress. It provides startup and investment related metrics based on the 169 official SDG sub-goals. The full set of metrics is outlined here: https://govclab.com/2023/05/23/venture-impact-metrics/

There are none. Often you don't need to compensate the accelerator however. It's to their benefit if your fund invests in their companies

There are none. Often you don't need to compensate the accelerator however. It's to their benefit if your fund invests in their companies

This sounds like you will be working for them :slightly_smiling_face: They are asking you to manage their fund. If you want to run your own firm, consider politely declining them.

This sounds like you will be working for them :slightly_smiling_face: They are asking you to manage their fund. If you want to run your own firm, consider politely declining them.

Rolling Funds by AngelList are a distinct product for part-time amateur or prosumer fund managers. The pros are: - They are easy to set up - There are tools to manage them - They have a community of opportunities The cons are: - The m...

Rolling Funds by AngelList are a distinct product for part-time amateur or prosumer fund managers. The pros are: - They are easy to set up - There are tools to manage them - They have a community of opportunities The cons are: - The manager is a consultant, not an owner of the fund - Managers do not get fund credit for their track record - The fees and expenses are very high As a rule, VC Lab and Decile Group do not support Angel List products because they are designed for managers that are not serious about the craft of running a venture capital firm.

That is not a common term. The title signifies that the partner is in the GP, versus the ManCo, and handles fund operations. This would be for a larger fund, and not relevant for small firms.

That is not a common term. The title signifies that the partner is in the GP, versus the ManCo, and handles fund operations. This would be for a larger fund, and not relevant for small firms.