True, the role of a VC is to help emerging companies finance their growth.
Being a VC is a cushy gig, but this is another way a current legend could become even more legendary.
People often think that the purpose of a VC is just to write a check and then read news during quarterly Board meetings.
The founder-entrepreneur purchases his stock for a penny a share and the VC general partner is allocated a percentage of the stock (if the VC firm is profitable) without paying extra for it.
That would be true regardless because she is a VC in the tech industry, so it is very likely that she lacks great examples.
Venture capital is one of those rare businesses where past results are indicative of future results, as success in VC creates a virtual cycle: a VC backs a start-up, the start-up is a huge success and generates publicity- both for the start-up and for the VC.
But a VC's allegiance is really to the pensions, insurance companies and other financial institutions that entrust them with huge sums of money.
Success in VC creates a virtual cycle: a VC backs a start-up, the start-up is a huge success and that success then generates publicity- both for the start-up and for the VC.
This seems like a strange concept for a VC, but it actually is quite common.
In fact, after nearly three years of warnings about a VC death spiral, there is a newfound confidence among the venture community.
The VC industry is going through a fundamental transition.
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The problem is that taxing Carried Interest as capital gains for early stage venture capital (VC) firms is not a loophole but is essential for starting new companies and spurring job creation.
This is a blog post from Mark Suster, who is one of the better VC bloggers and, as you can tell from the story, part of a strong investment partnership too.
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There is even a handful of European VC firms of a similar scale to American ones, with both the capital and the expertise to take start-ups global.
This time around, the VC community is also faced with a potent cocktail of high purchase valuations, long holding periods and cheaper exits, which are knocking the firms for a loop.
As a result Kleiner, once the undisputed king, is now just one of a half-dozen top-tier VC firms that include Sequoia Capital, Andreessen Horowitz, Greylock Partners, Benchmark Capital and Accel Partners.
Plus, with markets maturing, there is a legitimate question to be asked about where VC firms plan to deploy all this capital.
That is a conversation that needs to be had in the VC, Angel and Private Equity worlds.
By focusing on a less efficient portion of the market where there is no institutional VC powerhouse, there is less adverse selection.
This is akin to accepting VC funding instead of bootstrapping a startup.
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The horizon for VC funds is 10 years and the hurdle of having a body of data that you could go public on has only gotten higher.
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Keough's Web site is in Spanish, and the VC can't read a word.
But Marc might feel the stake is too small to justify basically shutting down his VC firm for a few years.
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Instead, if your company is not a good candidate for a public offering, a better option may mean to avoid VC money altogether and look at capitalizing on a niche.
In fact, I was tweeting with Mark Suster a few days ago, a two time entrepreneur turned prominent VC located in LA. He posted a picture that showed 868 unread emails, which he said, is a good day.
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There is also the caveat that the nature of VC deals is shifting and the old demarcations between seed funding and the next level up, Series A funding, may be less clear.
If your company has grown to the point of a large Series A or B round, you should seriously ask yourself who the best person to run the company is because your VC certainly will.
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