Having been to a number of talks and panels, my biggest frustration with these occasions is when a moderator asks a VC: “So what do you invest in?”
And the VC would respond, “Good people, good markets.” Or “Ambitious founders tackling ambitious problems.” Or some cousin of it. Well, of course. I’m not saying they’re wrong, but no venture capitalist ever says, “I want to invest in bad people building in bad markets.” It’s the kind of advice and “insight” that’s equivalent to a large company saying their company culture is a “family.” Not wrong, but tells me nothing about what you actually want. The same is true for most advice for investors. And well, advice in the investing world is given quite liberally, without liability and responsibility most of the time.
So I made it a mission to collect pieces of advice that were actually tactical or differentiated. Advice that would make you turn your heads and actually pay attention. And under the right circumstances, actually useful. It’s why I wrote this blogpost’s predecessors:
- The first 99 pieces of unsolicited advice for investors
- The second 99 pieces of unsolicited advice for investors
This is the third one in this 99 series for investors. And, if by chance, you’re a founder reading this, to understand the mentality of a differentiated investor, you might also like the 99 series for founders. But I digress.
In no particular order other than the chronological order I found them, below is the third set of 99 pieces of advice for investors:
- Investing – Deal flow, theses, diligence
- Fundraising from LPs
- Fund strategy/portfolio construction/exiting
- Fund structure
- Portfolio support
- Governance/managing LPs
- Building a team
- Compensation
- Miscellaneous
Investing – Deal flow, theses, diligence
1/ “Any company that is pure execution risk without any market risk is not a suitable venture investment.” — Chris Paik
2/ “[In the private markets,] I don’t think we’ve seen a 70% write down yet or 70% of these [private companies] worth less than the cash [they’ve spent to date].” Take public market comparables. To see how much public companies are worth as a function of the money they’ve spent to date, look at the “Cumulative Retained Earnings” (which tells you how much money they’ve burnt over their lifetime) compared to the “Enterprise Value” (or market cap minus the cash they have today). If their enterprise value is less than their cumulative retained earnings, that means they’re worth less than the money they’ve spent to date. — David Friedberg (timestamped 4/21/2023, when he said there are 70% of public companies that are worth less than the cash they’ve spent to date, but we haven’t seen a 70% haircut to private market valuations)
3/ The first best use of any consumer product is crime. — Pre-seed VC
4/ When looking for outliers, “Invest in companies that can’t be described in a single sentence.” — Chris Paik
5/ “Venture investing process as a two-stage process – the first where you ensure you avoid false negatives – that is, you ensure that there are no errors of omission, where you unwittingly pass on meeting a potential winner. The second stage is where you avoid a false positive or errors of commission, that is, picking the wrong company.” — Sajith Pai quoting Karthik Reddy
6/ How a lawyer diligences AI companies:
- “How are you using AI? Is it a third-party? Let’s see those terms, contracts, etc.
- How are you using customer data? Prior agreements? Prior policies in place? Subsequent policies in place? You could lose the data, the models, and the algorithms. If found in violation by the FTC. States privacy laws like Texas, California, and Virginia also should be looked at.”
7/ “When it’s cooler to be in a startup than in a band, we’re at the top of the market.” — A fund of funds General Partner
8/ “Buy when there is blood in the streets, and sell when there are trumpets in the air.” — A Warren Buffett attribution
9/ Does this founder have 20 years of experience of 20 one-year experiences? Depth vs breadth. Which does the industry/problem they’re building for require?
10/ While there is no one “right” way to run a partnership meeting, beware of conviction-led deals (as opposed to consensus-driven), since partners are incentivized to go into sales mode to convince the rest of the partnership and may make it harder for them to see the flaws in the deal.
11/ In early stage venture, debates on price is a lagging indicator of conviction, or more so, lack thereof.
- Price also matters a lot more for big funds than small funds.
- Price also matters more for Series B+ funds.
- Will caveat that there’s an ocean of difference between $10M and $25M valuation. But it’s semantics between $10M and $12M valuation. How big your slice of the pie is doesn’t matter if the pie doesn’t grow.
- Not saying that it’s correlated, but it does remind me of a Kissinger quote: “The reason that university politics is so vicious is because stakes are so small.”
12/ “Judge me on how good my good ideas are, not how bad my bad ideas are.” — Ben Affleck when writing Good Will Hunting. A lot of being a VC is like that.
13/ We like to cite the power law a lot. Where 20% of our investments account for 80% of our returns. But if we were to apply that line of thinking two more times. Aka 4% (20 x 20%) of our investments account for 64% of our returns. Then 0.8% account for 51.2% of our returns. If you really think about it, if you invest in 100 companies, we see in a lot of great portfolios where a single investment return more than 50% of the historical returns.
14/ “Early-stage investing is NOT about mitigating the possibility of failure It’s about discounting the probability of an outsized outcome – what is the size and likelihood of a HUGE win Investing in “safe” companies due to fear of failure is the surest way to a mediocre returns.” — Rick Zullo
15/ “[David Marquardt] said, ‘You know what? You’re a well-trained institutional investor. And your decision was precisely right and exactly wrong.’ And sometimes that happens. In this business, sometimes good decisions have bad outcomes and bad decisions have good outcomes.” — Chris Douvos
16/ When calling a reference and asking about someone’s weakness, “If you were to hire someone under that person, what would be the top traits you’d look for?”
17/ Give founders a blank P&L statement. Tell them that is not their P&L statement; it is their customer’s. And ask them where do they/their product sit on their customer’s P&L statement. Those who are aware of who they are and who they need to sell to do better than those who don’t.
18/ No one has a crystal ball. Well, the pessimists do. They’re right 90% of the time.
19/ “I want the guy who understands his limitations instead of the guy who doesn’t. On the other hand, I’ve learned something terribly important in life. I learned that from Howard Owens. And you know what he used to say? Never underestimate the man who overestimates himself.” — Charlie Munger
20/ “Instead of saying, ‘This risk exists,’ we reframe the risk and ask, ‘What do I have to believe for this to work?’ Doing this transforms risk from a source of fear and unknown into a set of clear assumptions to be systematically tested and de-risked.” For example, “We have to believe we can scale the hardware to XYZ performance metric by ABC date. What are the key engineering constraints bottlenecking that?” — Mike Annunziata
21/ Questions to ask investee (on-list and off-list) references by Graham Duncan:
- How would you describe Jane to someone who doesn’t know her?
- What’s your sample size of people in the role in which you knew Jane?
- Who was the best person at this role that you’ve ever seen?
- If we call that person a “100”, the gold standard, where’s Jane right now on a 1-100?
- Does she remind you of anyone else you know?
- If Jane’s number comes up on your caller ID, what does your brain anticipate she’s going to be calling about? What’s the feeling?
- Three attributes I like to keep in mind are someone’s hunger, their humility, and how smart they are about people. If you were to force rank those for Jane from what she exhibits the most to least, how would you rank them?
- What motivates Jane at this stage of her life?
- If you were coaching Jane, how would you help her take her game up?
- If you were going to hire someone to complement Jane doing the same activity (NOT a different role), what would they be good at to offset Jane’s strengths and weaknesses?
- How strong is your endorsement of Jane on a 1-10? (If they answer 7, say actually sorry 7s are not allowed, 6 or 8? If the answer is an 8, “What is in that two points?”)
22/ “Neutral references are worse than negative references.” — Kelli Fontaine
23/ “If someone brags about their success or happiness, assume it’s half what they claim. If someone downplays their success or happiness, assume it’s double what they claim.” — George Mack
24/ “Historians now recognize the Roman Empire fell in 476 – but it wasn’t acknowledged by Roman society until many generations later. If you wait for the media to inform you, you’ll either be wrong or too late.” — George Mack
25/ “Joe Rogan and Warren Buffett are both entrepreneurs. But if you switched them, both businesses would fail. Rule of thumb: If a word is so broad that you can’t switch 2 things it describes, it needs unbundling.” — George Mack
26/ Are the founders at the same stage on the Maslow’s Hierarchy of Needs? If not, how have they come to terms with different motivations outside of the scope of the venture itself?
27/ $100K contracts take about 70 days to close. So a founder becomes interesting if they figure out how to close faster. — Gong State of Revenue Growth 2025 report
28/ Beware of “annual curiosity revenue.” “AI companies with quick early ARR growth can lead to false positives as many are seeing massive churn rates.” — Samir Kaji
29/ Data suggests that “never following on” beats “always following on” 63% of the time. “Outperformance for the typical portfolio is 12% better when you don’t follow on (3.52X vs 3.14X).” — Abe Othman
30/ “A successful reserve strategy depends both the chance of picking winners and the step up value at the next round. The stock price multiple * the probably of receiving funding = 1.” If the product of your variables is more than one, you should focus primarily on increasing your check size and ownership at entry. And as such, fewer to no reserves. If you’re below one, you’re better off with more reserves. — Clint Korver
31/ Be aware of “seed-strapping” among AI startups. Your SAFEs may never convert. “Watch for any revisions to *YC’s* SAFE or *YC’s* side letter (note: YC has a secret SAFE and side letter documentation not available on on their website, so careful with conclusions).” — Chris Harvey
32/ In underwriting AI companies in 2025, ARR and run rate are no longer signal. Instead, look at sales efficiency (how long it takes you to implement your product; if you charge more or double the price, will customers still buy your product?), the cost to acquire that revenue, and net dollar retention (gross churn, land and expand). — Nina Achadjian
33/ “The ‘raise very little’ strategy only works if you’re in a market that most people believe (incorrectly) is tiny or unimportant. If other people are paying attention, you have to beat the next guy.” — Parker Conrad
34/ Instead of asking founders/references what are their weaknesses, ask for 2-3 positive words that describe them and 2-3 positive words that DO NOT describe them.
35/ “You want to be pre-narrative. You want to position your capital in an area where the supply of capital increases over time and where those assets will be traded at a premium.” — Albert Azout
36/ “For Hard Tech companies, the only metric that matters before Series B is the ‘Speed of Hiring Impressive People’, aka the ‘SHIP’ rate.” — Mike Annunziata
37/ Beware of co-CEOs and founders who used to be VCs where their past firm isn’t investing. — Sriram Krishnan
38/ “If you don’t pay great people internally, then you’re a price taker.” — Ashby Monk
39/ “Buying junk at a discount is still junk.” — Abe Finkelstein
40/ “What do you do when you don’t know anything, you haven’t met anybody, you have no context, the human brain starts inventing rationale.” — Narayan Chowdhury
41/ “The bigger you get, the more established you get, the more underwriting emphasis goes into how this team operates as a structure rather than is there a star?” — Matt Curtolo
42/ “Price reflects the inefficiencies of the market.” — Albert Azout
43/ “You want to be pre-narrative. You want to position your capital in an area where the supply of capital increases over time and where those assets will be traded at a premium.” — Albert Azout
44/ “We don’t want a slow no. A slow no is bad for everybody.” — Sean Warrington
45/ “Today’s world is unpredictable, and this is as stable as it will ever be again.” — Seth Godin
46/ “Alfred is the worst e-commerce investor at Sequoia as he knows too much & I am the best biotech investor at Sequoia as I know nothing about biology.” — Roelof Botha, quoted by Finn Murphy
47/ “Since the job is not about simple pattern-matching but about finding true outliers, seniority and experience don’t guarantee success.” — Ian Park
48/ As your fund size grows, do be wary of investing in competing portfolio companies. While it’s always been a tradition in venture to not to, times may be changing. Be sure to be transparent and know how to separate church and state. “This is an issue where the business model for funds is at odds with what most founders want.” Ways you can do so. By Charles Hudson.
- “Use a seed fund or scout strategy to meet as many promising, early-stage companies as you can.
- “Focus on investing in Series A and Series B (instead of seed) rounds and pay up to get into the winners when it’s clear which companies are working.
- “Buy secondary positions in the companies that matter but that you missed.
- “Invest in competitors but have different investors take board seats and create firewalls to limit information spillover.”
49/ “I deeply subscribe to, ‘There’s always another train leaving the station.’” — Wendy Li
50/ “Alpha’s three things: information asymmetry, access, and, actually, taxes.” — Vijen Patel
51/ The worst mistake you can make as an early-stage investor is to believe you’re the smartest person in the room.
Fundraising from LPs
52/ “If you’re at 75-80% committed and then you say there’s a single close, that will drive urgency. If you’re at 10 to 30 to 40% committed, and you say there’s a single close, you have no catalyzing power. There’s just so much dirt to hoe. When I went out, when people would ask, ‘When are you closing?’ I would say, ‘We will close on this particular date and ideally it will be a single close. And here is where I am. I’ve closed X% of the pipeline and the total value of the pipe of interested investors was this amount of money.’ The goal was to show with a relatively small conversion rate, I could get to a single close.” — Tomasz Tunguz
53/ What to prepare for the due diligence questionnaire (DDQ) with institutional LPs. — Chris Harvey
- Governance & Oversight
- GP Removal Process
- GP Conflicts of Interest Disclosures
- GP Devotion of Time
- Fiduciary Duties Owed by GP
- Decision-Making Processes
- LPAC Roles & Responsibilities
- LP Reporting Guidelines
- Deadlock Resolution (2 or 4 person GPs)
- Economic & Tax Terms
- Affiliated LPs (0 fees to GP team)
- Capital Calls (Schedule/L. fees/Interest)
- Distribution Waterfall
- Fund Expenses/Cap vs. Mgmt Fees
- Special Tax (ERISA, ECI, FATCA, etc)
- Subscription Lines
- Mandatory Tax Dist.
- Warehoused Assets (QSBS)
- Regulatory Compliance
- IA §§203, 206—Code of Ethics, P2P, etc
- CFIUS Compliance
- VC & Private Fund Limits—§203(l)/(m)
- NQI/Qualifying Investments (<20%)
- Warehoused Investments (VC)
- State ERA rules <$25M AUM
- Look-through Rules & Beneficial Ownership—§3(c)(1)
- Operations & Admin
- Trademark Rights/IP
- Vesting Schedules
- Principal Office Location
- List of Fund Assets + SPVs
- Comp Policy for GP and Team
- Verification of GP Track Record
- Cybersecurity & Risk Management
- Service Providers (Fund Admin, Ops, Tax, Legal)
54/ What Minal Hasan includes in the fund diligence room (specifically for Fund IIs)
- Primary materials
- Due Diligence Questionnaire
- Pitch Deck
- Appendix to Pitch Deck
- Detailed Investment Thesis & Strategy
- Term Sheet
- LPA
- Subscription Agreement
- Legal
- Incorporation Documents for LP, GP, and MC
- Entity Org Chart
- Team
- Team Bios
- Prior Partner Investment Performance
- Hiring Plan
- List of Advisors
- List of References
- List of Co-investors
- List of Service Providers
- Portfolio
- One-pager on each company
- Deal Pipeline
- Governance
- Board/Board Observer Seats
- Policies
- Sample Investment Memos
- Sample Quarterly Report
- Sample Capital Account Statement
- Sample Capital Call Notice
- Sample Distribution Notice
- Financial Docs
- Budget
- IRR Spreadsheet
- IRR Benchmarking
- IRR Letter certified by accountant
- Marketing
- Press mentions
- Authored thought leadership
55/ When fundraising, don’t share which other LPs you’re talking to. Even if LPs ask who you’re talking to. Unless money is in the bank, nothing counts. Tell the other LPs that you have non-disclosures with all your other LPs, but that you have a lot of interest. If you share the marquee names, the other LPs’ will base their decision on the closing of those LPs. If they commit, great. If not, it will materially impact how the new LPs view your fund.
56/ When working with overseas LPs, you should ask for their citizenship, where their capital is domiciled at, and who is the ultimate beneficial owner if not the person you are pitching? This would help you navigate CFIUS rules and knowing who you’re actually bringing on board.
57/ You should ask prospective overseas LPs what their citizenship is and who the ultimate beneficial owner (UBO) is, if not the person you are talking to, as you are doing diligence on your prospective LPs.
58/ “Going to see accounts before budgets are set helps get your brand and your story in the mind of the budget setter. In the case of the US, budgets are set in January and July, depending on the fiscal year. In the case of Japan, budgets are set at the end of March, early April. To get into the budget for Tokyo, you gotta be working with the client in the fall to get them ready to do it for the next fiscal year. [For] Korea, the budgets are set in January, but they don’t really get executed on till the first of April. So there’s time in there where you can work on those things. The same thing is true with Europe. A lot of budgets are mid-year. So you develop some understanding of patterns. You need to give yourself, for better or worse if you’re raising money, two to three years of relationship-building with clients.” — David York
59/ “Getting an LP is like pulling a weight with a string of thread. If you pull too hard, the string snaps. If you don’t pull hard enough, you don’t pull the weight at all. It’s this very careful balancing act of moving people along in a process.” — Dan Stolar
60/ “Things that break the rules have a bigger threshold to overcome to grab the reader’s attention, but once they do, they tend to have a stronger, and more dedicated following. Blandness tends to get fewer dedicated followers.” — Brandon Sanderson on creative writing, but applies just as well to pitches
61/ In all great stories, the protagonist (in the case of a pitch, you) is proactive, capable, and relatable. Your pitch needs to show all three, but at the minimum two out of the three. — Brandon Sanderson
62/ “Data rooms are where fund-raising processes go to die.” Prioritize in-person and live conversations. When your investor asks you for documents, ask for 15 minutes on their calendar so you can “best prepare” the information they want. If they aren’t willing to give you that 15 minutes, you’ve lost the deal already. — Mark Suster
63/ “Funds can start with a private offering, then move to 506(c) after the prior offering is completed without a waiting period—new Rule 152(b) allows for a quick switch, you just can’t do them at the same time or start with Rule 506(c) then move to 506(b).” — Chris Harvey
64/ “Set your own agenda or someone else will.” — Melinda Gates
65/ To address key person risk if the GP, or one of the GPs, has a debilitating health condition within the fund term, include the below in the LPA, by Shahrukh Khan:
Each Key Person shall, as a condition to their designation, represent and covenant to the Partners [inclusive of the GP and LPs] that, to the best of their knowledge, they are not currently experiencing any medical condition reasonably expected to materially impair their ability to perform their duties over the Term [usually 10-12 years] of the Fund.
If, during the Investment Period [when the fund is actively making investments], a Key Person is diagnosed with or undergoes treatment for a condition that materially impacts their ability to fulfill their responsibilities, the General Partner shall promptly disclose to the Limited Partners that a Health-Related Key Person Event [we could define this broadly] has occurred. The specifics of the health condition need not be disclosed [maybe except to the LPAC if there is one?].
Upon such notification, the Investment Period will be suspended and cannot continue without the express approval of the Limited Partners. [I feel like this could mean that no new investments can be made until LPs review and vote on whether to proceed with the fund’s activities in light of the health-related situation.]
66/ When asking LPs what they invest in, sometimes what they don’t invest in is more helpful than what they say they invest in. Most LPs are trained to be generalists — by sector, by stage, by asset class — so asking what they do invest in often nets an answer like “We invest in everything” or “We only invest in the best,” which are often less helpful tells when you’re trying to figure out if you’re a good fit for them or not.
67/ If you have a 3(c)(1) fund, “if an investor owns >10% of your fund, the SEC’s look-through rule requires you to count ALL underlying beneficial owners toward your 100-investor limit.” The workaround is you create a side letter for large LPs that includes this statement: “The Investor’s Capital Commitment shall equal the lesser of [check size] or 10% of total fund commitments.” — Chris Harvey
68/ At your AGM, talk about categories of VCs you admire. For instance, “inception funds” or “superscale funds.” And the logos you admire in each category. Then show the funds that actually follow after your capital. This builds rapport with your LPs and that you’re not just shooting from the hip, where it “just so happens” that some random awesome fund follows your capital. Inspired by Gil Dibner.
69/ “If an LP isn’t following up with an ask for the data room, refs and lays out a path to a potential next meeting, then it’s a pass. Hint — don’t offer the dataroom. I always say yes.” — Endowment Eddie
70/ “[LPs] are underwriting your ability to create signal under uncertainty. If your fund slide can’t do that, your deck is already leaking trust.” — Thorsten Claus
71/ “I’m not here to tell you about Jesus. You already know about Jesus. He either lives in your heart or he doesn’t.” — Don Draper in Mad Men
72/ On GPs answering questions on operational excellence… “The best answer I could ask from a GP is for them to be super honest and say, ‘These are the people I’ve leaned on to help me understand what best practices look like.’” — Nicky Sugarman
73/ When reporting numbers, it’s helpful to have more than one TVPI number. One number should represent last round valuation prices. Another should be the number you believe is authentic to you, which likely includes some companies that have been proactively written down and revenue multiples that reflect where the company is currently at. Nevertheless, always explain your rationale as to why.
74/ When you’re fundraising from institutions, expect “27 months from first meeting to wire, 4.7% of prospects commit,” and “annual costs [of] $2.1M+ in infrastructure.” — Pavel Prata
75/ “Speed to fundraise does not always equate to a strong investor.” — Lisa Cawley
Fund strategy / portfolio construction / exiting
76/ If you have a follow-on strategy or a reserve strategy, track your “follow-on MOIC.” Return hurdles are 10x MOIC for initial capital. And 4-5x MOIC for follow-on capital. The more you invest in follow on, the less TVPI you’ll have. “If you’re going from pre-seed to seed, you’re tracking to a 5x MOIC. If you’re going from a seed to Series A, that goes down to 3x.” — Anubhav Srivastava (timestamped Apr 7, 2023)
77/ The reasons Fund I’s and II’s outperform are likely:
- Chips on shoulders mean they hustle more to find the best deals. They have to search where big funds aren’t or come in sooner than big funds do.
- Small fund size is easier to return than a larger fund size.
- Rarely do they have ownership targets (nor do they need significant ownership to return the fund). Meaning they’re collaborative and friendly on the cap table, aka with most other investors, especially big lead investors.
- Price matters less. Big funds really have to play the price game a little bit more since (1) likely to be investing in multiple stages with reserves, and price matters more past the Series A than before, and (2) they’re constrained by check size, ownership targets, and therefore price in order to still have a fund returner.
78/ “Strategy is choosing what not to do.” — Peter Rahal
79/ “We expect GPs to have 1% ownership for every $10M in fund size.” — Large multi-billion family office
80/ “Exiting a position in a company to return DPI to LPs is not a reflection of your stance on the company, but your stance on the market.” — Asher Siddiqui
Fund structure
81/ If you have more than $10M and are not a solo GP, consider separating your GP and management company entities. While there are about $5000-10,000 in costs per year, separating fund structures allows for more optimal tax planning, better liability protection, continuity across GP entities with future funds, and flexibility to adopt W2 employment for future employees which is hard to do under a partnership structure. — Chris Harvey
82/ If you’re a GP at a large fund making >$1-2M in annual fees, consider two metrics: (a) AUM times management fee divided by number of GPs, and (b) NPV of potential future carry on that AUM divided by number of GPs. You never want (a) to be greater than (b).
Portfolio Support
83/ “Just because I have a front row seat at a championships [basketball game] doesn’t mean I can coach an NBA team.” — Brian Chesky
84/ “The thing about working with self-motivated people and driven people, on their worst day, they are pushing themselves very hard and your job is to reduce the stress in that conversation.” — Nakul Mandan
85/ “The median value-add is about zero. The mean is less than zero. Most things work because they just work (right set of users wanted something at the right time) and the executive team builds the right culture to hire a great team to operate in that market, not because of what a VC does. Value-added service is ‘product as marketing’ for 90% of investors who pitch it.” — Kanyi Maqubela
86/ Get access to as many different offices of your portfolio company’s potential customers as possible. Even better if you know them so well, they give you their office keys. — John Gleeson
87/ “I find most meetings are best scheduled for 15-20 minutes, or 2 hours. The default of 1 hour is usually wrong, and leads to a lot of wasted time.” — Sam Altman
88/ “Process drives repeatability.” — Andy Weissman
Governance/Managing LPs
89/ If you don’t know what to ask your LPAC, ask about extensions on fund length (i.e. past 10+2 years), exceeding limits on company concentration and recycling, investing in startups across funds, and early DPI. — Hunter Walk
90/ At the annual summit… “When you speak on market/themes, I don’t want to hear from the managing partners. Bring out your young guns and the members of the team who are your ground game/first line.” — Endowment Eddie
91/ After the third extension to a fund, control and decision usually shifts from GPs and LPAC to general LP base consent. 93% of LPAs allow for at least 2 years of an extension. — Runjhun Kudaisya, Natalia Kubik, Brian O’Neill, Thomas Howard (Goodwin)
- “First extension: 63% of funds surveyed allow GPs to authorize the first extension at its sole discretion, typically for one year.
- Second extension: 42% of funds surveyed require approval from the LPAC to authorize the second extension.
- Third extension: 41% of funds surveyed require consent from the fund investors to authorize the third extension. Note that further extensions can always be approved by an amendment to the fund documents, but this would require consent from at least 50% and usually 75% of investors by commitment or interest.”
92/ “Too many calls I get on, it’s a re-hash of what the strategy is. Assume if I’m taking the call, I actually spent five minutes reminding myself of who you are and what you do.” — Chris Douvos
93/ “One thing I hate is when I meet with someone, they tell me about A, B, and C. And then the next time I meet with them, it’s companies D, E, and F. ‘What happened to A, B, and C?’ So I’ve told people, ‘Hey, we’re having serious conversations. Help me understand the arc.’ As LPs, we get snapshots in time, but what I want is enough snapshots of the whole scene to create a movie of you, like one of those picture books that you can flip. I want to see the evolution. I want to know about the hypotheses that didn’t work.” — Chris Douvos
94/ “Every letter seems to say portfolios have ‘limited exposure to tariffs.’ The reality is we’re seeing potentially the breakdown of the entire post-war Bretton Woods system. And that’s going to have radical impacts on everything across the entire economy. So to say ‘we have limited exposure to tariffs’ is one thing, but what they really are saying is ‘we don’t understand the exposure we have to the broader economy as a whole.’” — Chris Douvos
95/ “Bad performance is explainable, but operational failures erode trust and your LPs aren’t going to re-up.” — Liz Ferry
Building a team
96/ “You can’t exceed one associate per partner and expect those associates to have real influence.” — Mike Dauber
97/ “Scaling is not synonymous with increasing fund size. To me, scaling means you’re increasing in sophistication. You’re increasing in focus. And that’s really a sign of maturity and fund size is a byproduct of that.” — Lisa Cawley
Compensation
98/ In a 2024 survey, in regards to junior team members’ compensation, “AUM matters less than you think.” There’s only a 17% pay bump on base pay for associates between $1.5B funds and $156M funds. In addition, levers that can boost a GP’s take-home pay include GP staking and cashless contributions. — Chris Harvey, with reference to Deedy Das and Venture5 Media
Miscellaneous
99/ “Never sit alone at lunch.” — Alan Patricof
Photo by Emmanuel Denier on Unsplash
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.
