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That's interesting to know. My guess is that, other than the management fee, there are two potential sources of money that can pay for those additional services
by bing_dai 10y ago
That's interesting to know. My guess is that, other than the management fee, there are two potential sources of money that can pay for those additional services:
1. A portion of the profit that a16z made from previous exits.
2. This is a less likely option - asking portfolio companies to pay for those services. I know VCs that bill their portfolio companies for certain professional services.
- foobarqux 10y agoWhich services? Charging for services is common in private equity, but I was not aware that VCs also did so. Are these top-tier VC funds?
- justinv 10y agoDesign, legal, engineering, etc. A16Z has a lot of in house partners that focus on things other than just investments. Edit: Just want to say that the top funds do not charge for these services. Some funds do - they invest and then you pay them back a bunch of money for services.
- bing_dai 10y agoBusiness development, market assessmebt, technical development etc. None of these firms that charge their portfolio companies are the typical valley top-tier funds, but I do not think it means that charging portfolio companies for professional services is a bad thing.
- gumby 10y agoThis is part of the model of Playground.global, Andy Rubin's hardware-oriented VC firm, although you pay with extra equity at the common price.