What’s the goal of the investors who give the VCs their money? LPs are seeking a 3x return on their dollar, and they don’t really care how it’s achieved...as long as it’s legal. If a VC is investing out of a $500M fund then they need to return $1.5B to their LPs. But by only owning ~10% of each company, VCs need to help generate $15B in equity value from their investments. LPs advice to entrepreneurs is to seek out VCs who offer more than just money. As an entrepreneur you may start getting calls from LPs who want to co-invest and when those calls from LPs start coming you should ask yourself what they’re trying to achieve. If investors are just dumb money then you have to decide if that’s what you want.
Panelists:
Elizabeth "Beezer" Clarkson, Managing Director @ Sapphire Ventures
Chris Douvos, Managing Director @ Venture Investment Associates
Alex Bangash, Founder & Chairman @ Trusted Insight
Harry Stebbings, Host@ The TwentyMinuteVC & SaaStr Podcast