Venture Capital Flashcards
Why do you think you can be a VC?
Each deal is entirely unique: so you learn something new but you apply broad experience and judgement to the task of picking winners . . . and I bring a lot of that—broad operating and investing experience. I’ve evaluated enough ventures to know what it takes for a venture to succeed.
What are you reading?
Prescription for the Planet, by Tom Blees.
The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies by Mahendra Ramsinghani
What can the 2.5% fee be used for?
Day-to-day operation of the firm, including salaries, travel, leases and legal expenses.
Who is an LP?
Pension funds, endowments, foundations, corporations, private family offices and individuals.
What is the motivation of the LP?
Investment return and asset diversification.
What is the typical VC return?
20% of the IRR
What is the key to successful VC investing?
“The key to making great investments is to assume that the past is wrong, and to do something that’s not part of the past, to do something entirely diffferently.”
—Donald Valentine, Founder, Sequoia Capital
What type of fund is a venture fund?
Ventures is a “close-end fund,” once the target is raised and the fund is subscribed, no new investors are admitted.
Why are VC investments risky?
Because you are placing a bet on an unproven technology, with shifting markets and first-time CEOs. On average more than 80% of all investment fail.
What will you advise your portfolio companies to do about IP?
The IP environment has changed, so we need to confirm early on that there is “Freedom to Operate,” and check that there are no patents which prohibit our ability to operate in a technological area. This clears the company to proceed.
