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Tim Friedman, Founder, PE Stack , said, “If I could offer one piece of advice to today’s managers, it would be to take the time to understand the demands of the modern institutional LP. We are also seeing technology evaluation as an increasingly important part of LP operational due diligence.
An investor had few hard metrics other than the actual financials, and little technology to make the process scaleable. Over the past few decades, better metrics became available, and investors could take a more analytical, data-driven approach. ” Historically, investing was a manual, artisan process.
Building a venture capital firm isn’t about continuing to scale talent aggregation over time like most businesses, rather it’s about having a consistent right amount of talent and scaling AUM over time. Calibrated against the firm’s overall velocity (which can vary), this metric is a tell-tale about a Partner’s standing with their peers.
He surmises that LPs aren’t buying the argument that large funds don’t perform. Beyond the fact that LP capital commitments don’t prove anything about returns, however, large funds are likely much more resilient to a few bad years than small funds are. But why would any LP ever drop out of such a fund?
Many have noted that the aggregate shareholder value created by all of the Unicorns will vastly overshadow the losses from the inevitable failed unicorns. They are likely sitting on amazing paper-based gains that have already been recorded as a success by their own investors — the LPs.
Typically, Pre-Seed rounds are less than $1M in aggregate capital raised. The first time I used the words “pre-seed” (yes, the initial use was in all lower-case, but then became upper-case over time) was on June 27, 2013, at the K9 Ventures LP Meeting. Q: What amount of financing is considered Pre-Seed? Q: Is Pre-Seed a Thing?
It kind of aggregates technology content, I suppose. You can go read about it on Wikipedia and whatnot, but it's sort of a metric that economists use to look at the various countries of the world and measure how economically free those places are. How did it come on your radar for the first time?
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