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Most LPs are other funds (e.g. pension funds, university endowments) or rich families. As far as I know, companies like Goldman don't invest in VC funds becaus
by pg 15y ago
Most LPs are other funds (e.g. pension funds, university endowments) or rich families. As far as I know, companies like Goldman don't invest in VC funds because that sort of investment is too long term for them. (LPs in a venture fund might not get money back for 10 years.)
There would be nothing distinctive about pooling money from rich individuals because that's what a lot of LPs already are.
As of now, essentially zero investors want to fund "lifestyle companies" (= companies that remain independent but never grow to the point where there is a market in their stock) because there is no way to get one's capital back.
(I say essentially zero because apparently Bezos invested in 37signals in return for dividends, but that sort of arrangement is as of now vanishingly rare.)
- stevenj 15y agoAt a certain level, dividends seem like they could be pretty valuable. Is such an arrangement rare because the amount of dividends in this type of situation is just too small? I'm curious if an alternative (and effective) use of one's capital would be to invest in these other types of businesses. Or even buying them outright.
- rms 15y agoIt's almost definitely not an effective use of one's capital. Angel investment is a bad industry to diversify into unless you have some sort of strong competitive advantage as an angel. Otherwise you're likely to be one of the median investors losing money.