11 ms·

How to be a VC without any Capital

41 points by replicatorblog 11y ago

arbuge 11y ago
You would not, by definition, be much of a venture capitalist without any capital to command. Perhaps a better title might be "How to raise your chances of some day being a professional VC, slim as they might be."
- replicatorblog 11y ago
  Some LBO guys would beg to differ ;-)
- charlesdm 11y ago
  Money flows to opportunities, not the other way around. If I can put X + Y together for $z, and I can sell it for $z*3, then it will be easy to find someone to give me $z.
  - arbuge 11y ago
    Quite true but this kind of wheeling and dealing is not something that VCs typically do, in my experience at least.
- w1ntermute 11y ago
  Social capital is just as important in the venture world as financial capital.
cpach 11y ago
Why not just start your own company?
- replicatorblog 11y ago
  A few reasons: + Different skill sets: VC is very much a relationship/network/finance job, founding an operating company requires execution against many more functions, especially product. + Diversification: Often people who want to be VCs have had some success in founding companies, but modest. If you look at most entrepreneurs turned VCs, they sold their companies for relatively small amounts (with some notable exceptions e.g. Rich Barton, Reid Hoffman, Vinod Khosla). They know how hard it is to build an amazing company. Being a VC allows you to use those hard won skills while diversifying your portfolio. + Lifestyle: Being a founder is great, but it's a roller coaster. Being a VC is hard work, but a bit more steady state.
dovereconomics 11y ago
> there will be plenty of angels or firms willing to cut a check or, at least, take a meeting. What would keep them from ditching you and getting the deal without commission/bonus? 'Niceness'/'Decency' doesn't really work in this industry.
- supster 11y ago
  You wouldn't take another deal to them ever again.
  - charlesdm 11y ago
    And you'd let the company you sourced know, of course, what kind of person they're dealing with. Do you really want to take an investment from an angel or firm who just screwed someone over for a 2% commission? The answer is nearly always no. People who screw others over generally don't last that long, and they tend to do it everywhere (i.e. it could happen to you in your next investment round)
    - rmah 11y ago
      Not positive, but I think not disclosing a commission for arranging financing is illegal.
      - charlesdm 11y ago
        Isn't disclosing a normal thing to do? If I say, I can try and help you get financing through my network, and if we put together a deal, I'd like a small commission (2-3-4% success fee), that seems entirely fair. Obviously laws differ based on the country, but I don't see anything being wrong with that if you're being transparant with both parties. This is very, very common in the traditional business world.
      - GFK_of_xmaspast 11y ago
        It's called 'disruption.'
mmastrac 11y ago
> There is no clear mechanism for getting cut in on the deal in this model. So, volunteer work?
- logicallee 11y ago
  as far as I can tell, the author of this blog post would like to increase his deal flow by arguing that volunteers should do his work for him, and send vetted deals his way (after doing due diligence). I only gave it a cursory reading though! Thoughts on my take?
  - replicatorblog 11y ago
    Not the point of the post at all. The author wrote this as advice to people who want to break into VC, which is a common question he receives, per the article.
- replicatorblog 11y ago
  Spec work in an attempt to get a job in venture capital.
rmason 11y ago
The article is click bait. These days if you've sold your company and have a small amount of money to invest you might as well start your own fund, but do it as an AngelList Syndicate. https://angel.co/syndicates/start https://angel.co/syndicates/start If you're going to become an angel investor then why not let other people invest alongside you? So instead of putting just $25,000 into a deal you can put $250,000 - 500,000 into a startup. Course if you're a flop you will lose your investors but then again that is how it works in the real VC world ;<).
Roadgazer 11y ago
Helping startups and investors to get connected and close the deal is very valuable by itself. Though it should be real help to matter to both. And it's not highlighted well in the article.

You would not, by definition, be much of a venture capitalist without any capital to command. Perhaps a better title might be "How to raise your chances of some day being a professional VC, slim as they might be."

replicatorblog 11y ago
Some LBO guys would beg to differ ;-)
charlesdm 11y ago
Money flows to opportunities, not the other way around. If I can put X + Y together for $z, and I can sell it for $z*3, then it will be easy to find someone to give me $z.
- arbuge 11y ago
  Quite true but this kind of wheeling and dealing is not something that VCs typically do, in my experience at least.
w1ntermute 11y ago
Social capital is just as important in the venture world as financial capital.

cpach 11y ago

Why not just start your own company?

replicatorblog 11y ago
A few reasons: + Different skill sets: VC is very much a relationship/network/finance job, founding an operating company requires execution against many more functions, especially product. + Diversification: Often people who want to be VCs have had some success in founding companies, but modest. If you look at most entrepreneurs turned VCs, they sold their companies for relatively small amounts (with some notable exceptions e.g. Rich Barton, Reid Hoffman, Vinod Khosla). They know how hard it is to build an amazing company. Being a VC allows you to use those hard won skills while diversifying your portfolio. + Lifestyle: Being a founder is great, but it's a roller coaster. Being a VC is hard work, but a bit more steady state.

dovereconomics 11y ago

> there will be plenty of angels or firms willing to cut a check or, at least, take a meeting. What would keep them from ditching you and getting the deal without commission/bonus? 'Niceness'/'Decency' doesn't really work in this industry.

supster 11y ago
You wouldn't take another deal to them ever again.
- charlesdm 11y ago
  And you'd let the company you sourced know, of course, what kind of person they're dealing with. Do you really want to take an investment from an angel or firm who just screwed someone over for a 2% commission? The answer is nearly always no. People who screw others over generally don't last that long, and they tend to do it everywhere (i.e. it could happen to you in your next investment round)
  - rmah 11y ago
    Not positive, but I think not disclosing a commission for arranging financing is illegal.
    - charlesdm 11y ago
      Isn't disclosing a normal thing to do? If I say, I can try and help you get financing through my network, and if we put together a deal, I'd like a small commission (2-3-4% success fee), that seems entirely fair. Obviously laws differ based on the country, but I don't see anything being wrong with that if you're being transparant with both parties. This is very, very common in the traditional business world.
    - GFK_of_xmaspast 11y ago
      It's called 'disruption.'

mmastrac 11y ago

> There is no clear mechanism for getting cut in on the deal in this model. So, volunteer work?

logicallee 11y ago
as far as I can tell, the author of this blog post would like to increase his deal flow by arguing that volunteers should do his work for him, and send vetted deals his way (after doing due diligence). I only gave it a cursory reading though! Thoughts on my take?
- replicatorblog 11y ago
  Not the point of the post at all. The author wrote this as advice to people who want to break into VC, which is a common question he receives, per the article.
replicatorblog 11y ago
Spec work in an attempt to get a job in venture capital.

rmason 11y ago

The article is click bait. These days if you've sold your company and have a small amount of money to invest you might as well start your own fund, but do it as an AngelList Syndicate. https://angel.co/syndicates/start https://angel.co/syndicates/start If you're going to become an angel investor then why not let other people invest alongside you? So instead of putting just $25,000 into a deal you can put $250,000 - 500,000 into a startup. Course if you're a flop you will lose your investors but then again that is how it works in the real VC world ;<).

Roadgazer 11y ago

Helping startups and investors to get connected and close the deal is very valuable by itself. Though it should be real help to matter to both. And it's not highlighted well in the article.