Venture Partnerships vs. Solo Capitalists

From The Next Big Thing by Nikhil Trivedi — read the original.

Notes

• The framework I return to when analyzing the venture capital industry is The Venture Capital Flowchart (#12): Find, Decide, Win, Help, Exit. To study differences between solo capitalists and traditional venture partnerships, it’s also important to think about Fundraising, the process by which VCs raise capital from limited partners (LPs).
• The advantages that partnerships have in sourcing companies is greater surface area.
• Who understands our business best, or more importantly, who has the clout to push this investment through? Different partners having their own swim lanes can lead to some companies not finding the right “fit” within the partnership to look at their company.
• On the one hand, this can lead to better decision-making, as partners push one another on their judgment and level of conviction. On the other, more steps in the process, such as more partners for founders to meet, can lead to more inefficiency and a slower decision.
• A core advantage for venture partnerships is that they can offer services, such as help with recruiting, as well as multiple superpowers within the investment team, to help portfolio companies. However, a disadvantage is once again potential confusion on who within a partnership to go to for what type of help. Bifurcation in Investing
• As LP Craig Thomas writes, **“brand is arguably the only thing that resembles a moat in traditional venture capital.” **My bet in the coming decades is on the next great partnership building that brand.