E30: Alan Feld, Co-Founder of Vintage Investment Partners on How to Handle Succession in VC
Jan 4, 2024
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Alan Feld, Co-Founder of Vintage Investment Partners, shares his experience and insights on product-market fit, building an enduring VC firm culture, and engaging with General Partners. They discuss successful GP cultures, investment allocation, and VC-LP relationship transparency. They also explore the importance of self-reflection and learning from mistakes, hiring operators, and long-term thinking in venture capital.
Building a successful venture fund requires attracting great entrepreneurs and prioritizing long-term sustainability over short-term economics.
Creating a culture of humility, honesty, and self-reflection is crucial for success in the VC industry.
Focusing capital on the best-performing companies and building enduring partnerships between LPs and GPs maximize returns and long-term success.
Deep dives
Building a Long-Term Franchise
The key to building a successful venture fund is to focus on attracting great entrepreneurs and giving them the support they need to succeed. This requires a culture of humility, honesty, and self-reflection within the firm. The ability to admit mistakes, learn from them, and make tough decisions is crucial. It is important to prioritize long-term sustainability over short-term economics. Building enduring relationships with entrepreneurs and being a supportive partner throughout different market cycles is essential for success.
The Importance of Honesty and Humility
Being honest and humble is important for both GPs and LPs. GPs should be transparent about their investments, admit their mistakes, and make tough follow-on investment decisions based on sound judgment rather than defensive strategies. LPs should also ask tough questions and provide constructive feedback to help GPs improve. The VC industry can benefit from a culture of humility and self-reflection, where partners challenge each other in a supportive manner and focus on continuous learning.
Allocating Investments for Impact
When allocating investments in a fund, it is important to concentrate capital in the best-performing companies rather than spreading it too thin. Identifying the top performers early on may be challenging, but focusing on the core investments that have the potential for massive success is key. Making tough decisions about follow-on investments and being disciplined about valuations can help maximize returns.
Partnership and Transparency
Building enduring partnerships between LPs and GPs is essential for long-term success. LPs should focus on finding GPs who are passionate about building sustainable firms and who prioritize partnership and transparency. Being a supportive and value-added LP involves not only providing capital but also offering connections, deal flow, and other resources to help the portfolio companies succeed.
Learning from Mistakes and Continuous Improvement
A culture of learning from mistakes and continuous improvement is crucial for success in the VC industry. GPs should be reflective, honest, and self-aware, willing to admit and learn from their investment mistakes. By fostering a culture of honesty, humility, and self-reflection, GPs and LPs can constantly improve their decision-making, support their portfolio companies effectively, and build enduring businesses.
Alan Feld sits down with David Weisburd to talk about his experience founding Vintage, the significance of product-market fit in VC, and how Vintage has thrived over two decades. They discuss the impact of personal history on investment decisions, building an enduring VC firm culture, and engaging with General Partners. They also touch on successful GP cultures, investment allocation, and VC-LP relationship transparency.
(0:00) Introduction and Alan's journey to founding Vintage
(6:37) Importance of product-market fit and sector-based fund structure in venture capital
(8:57) Sponsor: Bedav Insurance Group
(9:46) Lessons learned from managing and growing Vintage over 20 years
(17:05) Role of personal history in shaping successful entrepreneurs and investment decisions
(21:29) Building an enduring venture capital firm: Culture, succession, and economic sharing
(28:27) Regrets, reflections, and Vintage's approach to engaging with General Partners
(33:40) Cultures at GPs that consistently return alpha and importance of humility and honesty
(41:30) Allocating investments, follow-on investing, and the value of transparency in VC-LP relationships
(46:36) Wrap-up: Reflections on building a lasting venture fund
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