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At the other end of the spectrum large funds have gotten even larger in the past few years which has massively increased the amount of consolidation in our industry as 66% of LP money into venture is now concentrated in late-stage or full-cycle VCs. Why is this? This is a structural shift in our industry few have talked about publicly.
The famed business strategist Michael Porter described a set of successful general strategies which firms employ to achieve a sustainable competitive advantage: differentiation strategy and cost leadership strategy for those firms with a broad market scope, and a segmentation strategy for those with a narrow market scope.
I counsel first-time VCs (as well as founders) to have mid-funnel strategies to get from first LP meeting to close and to put a disproportionate amount of time into this area (I say more about this on the podcast starting at timecode 27:41). And again, just like in enterprise sales, this is all about differentiation ?—?what
Estimated 100 – 200 total entities Friends & family – basic networking. Question : How do generalist PE funds differentiate and get in the advisers list? Question : How do PE funds differentiate in the LOI phase? Zubin Avari, Charter Oak Equity LP Christopher A. Prestegaard, High Road Capital Parnters.
In 2018, the 8,000 active private equity funds globally had a 15 to 16 percent annual performance differential between top and bottom quartile funds. Here lies the two degrees of separation: the agent must get to the IC, who in turn must get to the LP. Typically less helpful for LPs to talk with intermediaries. .
” I hear, read, see examples every day of investors espousing differentiated theses with regards to why they exist. And why a LP should give them theirs. So we network, we write blog posts , we research, we tweet. .” “We invest in diverse founders.” ” “We invest with social good in mind.”
I hypothesized that, “Perhaps a contrarian statement in this environment: but even though there’s been a dip in fund size due to broad economic factors and LP appetite, it wouldn’t surprise me if the truly top firms raise even larger funds over the coming decade.” Local brewers = geography matters.
Areas of interest: crypto, climate, deep tech, India (& any truly unique/differentiated strategy) Must focus on pre-seed/seed, ideally < $20m fund size. The first is the fund that you would ideally raise if LP capital was not a constraining factor. Or an LP wants to anchor the fund, but asks for a large piece of the carry.
An addition to the portfolio typically offers some differentiation or new value proposition. My recommendation is basically to spend 10+ years building operating skills at tech companies (founder or meaningful contributor), expand your network and put together an angel investing track record. A powerful network is always valuable.
The most common strategies are to provide networking services and content to portfolio leaders so they can be more effective in their jobs. . As a result VCs who didn’t want to only compete on price began looking for ways to differentiate their money from the money of other investors and started deploying the strategies listed above.
Cindy Revol, Joe Beard and Anurag Jain from Perot Jain, LP We received a warm welcome from Trey Bowles when we first came to Dallas and there have been many others who have opened their arms to us since. Perot Jain, LP is an early stage venture capital firm founded by Ross Perot Jr. Ross Perot, Jr., About Perot Jain, L.P.
He’s focused on that sector (not exclusively but predominantly) and therefore has an amazing network at large financial services firms to help you with business development. Fred Wilson likes, “large networks of socially connected people” while Foundry lists its 5 key themes on its website. Do your homework.
We need to have a close look at the worlds two biggest social media networks of Twitter and Facebook – they run open API’s for each other to assist their customers and suppliers switch and share between each other. Recent growth in digital social networks has served as a reminder on what differentiates our species.
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