3 ms·
Four parts: 1) the bulk of returns are the few best performing investments, 2) there are material fixed costs in carrying an investment (partner attention, conf
by hedgehog 6y ago
Four parts: 1) the bulk of returns are the few best performing investments, 2) there are material fixed costs in carrying an investment (partner attention, conflict management, admin overhead), 3) it's a way to get proprietary insight into a new space, and 4) there's value in founder relationships (deal referrals, recruiting). Large funds write small checks to get an early view into promising companies that are too early for bigger investments. They are aware that many won't out but they believe they are better served getting in early & divesting most vs waiting and having less information or access.
- bigiain 6y agoAlso, it just occurs to me - I wonder if Josh and Baremetrics have _already_ helped these the VC firms our with enough deal referrals, contact, networking, and deal closing ammunition (and I suspect not, but given this is SV, data on other startups that was not publicly available but that Baremetrics was collecting?) - that made it an easy choice for them to say "Sure! We're totally happy with everything you've done for us overt the last 7 years already. Thanks man!"