The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified 246. Agglomerators vs. Specialists, the Rise of the Solo-Capitalist, and the Importance of Founder-Investor Fit (Nikhil Basu Trivedi)
Aug 31, 2020
41:41
Nikhil Basu Trivedi of joins Nick to discuss Agglomerators vs. Specialists, the Rise of the Solo-Capitalist, and the Importance of Founder-Investor Fit+. In this episode, we cover:
- Why did you decide to leave Shasta?
- What's the plan moving forward?
- The Rise of Solo Capitalists
- You wrote a great piece on the rise of this behavior, ‘The Rise of the Solo Capitalists’. What do you think has caused the rise in single GP funds?
- What are the main benefits to both investor and entrepreneur with this model?
- What are the limitations and/or downsides of this model?
- You wrote that an LP said that this model ‘may be the biggest threat traditional venture capital firms have seen in a long time’. Why?
- Founder-Investor Fit
- What do you think are the most important things for founders to consider when choosing an investor?
- There are many firms that don't care about the "fit" per se... they just want to get money into the best deals. And it can be tough for a founder to turn down the best offer or the biggest name investor. Do you think that lack of fit can lead to the demise of the company?
- Do you think that founder-investor relationships/dynamics will change significantly over the next decade? Why or why not?
- Agglomerators vs. Specialists
- Can you break down the types of focus amongst VCs? Agglomerators vs. Specialists?
- What do you think has caused the rise of the agglomerators?
- From a returns (TVPI) standpoint, do you think one model is superior to the other?
- A large, institutional LP said to me this week that he doesn't believe in sector-focused fund models and returns suggest that they underperform. He only invests in generalists with stage focus. Have you found that the specialists have underperformed the generalists?
- What do you think about the future of these models? Where will the most crowded section be, five years from now?
- What are your thoughts on rolling funds?