The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified 456. LP Insight on What Distinguishes the Good from Great VCs, Why VC Firms Fail, How to Mitigate Risk, and What to Look For When Metrics Mislead (Jon Terbell and Ted Clark)
Oct 21, 2024
Jon Terbell and Ted Clark explore what separates great VCs from the good ones, offering strategies for mitigating risk in venture capital. They discuss the importance of strong limited partner relationships and how market conditions impact investment decisions. The duo emphasizes the need for curiosity and engagement in fund manager pitches. Insights on constructing portfolios and aligning team capabilities are shared, along with advice for emerging VCs navigating today's evolving landscape.
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VC Firm Failure
- Venture capital firm failures often stem from misalignment between founders, strategy, and capital.
- This misalignment can manifest as founders staying too long, excessive greed, or inadequate structures for future generations.
Prioritizing Firm Longevity
- Prioritize the firm's longevity over personal ego.
- Delegate ownership, decision-making, and financial opportunities within the firm.
Transparency in Leadership
- Transparency in firm leadership is crucial for success.
- Clearly defined criteria for leadership roles and long-term vision create clarity and motivation.