A VC Agency Can Be Both a Partnership or a Assortment of Companions [mini post]

Ideas that are someplace between half-baked and overcooked…

It’s been my expertise that almost all enterprise companies both exist *as a result of* of a partnership, or as an alternative are a set of companions. The previous is a couple of group of individuals creating (or inheriting) a agency collectively as a result of it was one of the simplest ways for them to perform one thing they wished to do. The latter is extra about people who’ve discovered themselves as a part of the identical group, practising their enterprise collectively and individually.

This would possibly sound like the previous is “good” and the latter is in some way lesser however I don’t imply it that method. Each variations could be run nicely or poorly. Each variations could be nice traders. However they do are inclined to have completely different playbooks and implications for founders.

The previous normally advantages from collaboration however can endure from groupthink. The latter can comprise constructive competitors and difficult thought or simply plain disfunction.

The previous typically has extra hassle navigating a generational change or including new out-of-bounds thinkers. The latter is simpler to plug new gamers into however tougher to maintain these items all collectively.

The previous is aware of what they stand for and it sometimes shines by way of of their model, however has hassle with self-reflection and leaving the outdated methods behind.

The latter has extra problem in articulating why they exist past the financial movement of enterprise, but additionally readability within the true north of these incentives.

It’s possible an overgeneralization (or simply plain incorrect) to recommend the previous are collaborative of their determination making round investments whereas the latter is extra lone wolf. I’m additionally hesitant to say that these kinds of companies routinely divvy up economics in a different way however constantly inside their categorization.

However once I’m speaking with a GP, and attending to know their agency as coinvestors, I do discover this framework one which I mentally apply to grasp how they could ‘get to Sure’ on a portfolio firm, what help of that firm will appear like over time, and what might occur to the startup post-investment if the sponsoring GP leaves their agency.