A VC Firm Can Be Either a Partnership or a Collection of Partners [mini post]
It’s been my experience that most venture firms either exist *because* of a partnership, or instead are a collection of partners. The former is about a group of people creating (or inheriting) a firm together because it was the best way for them to accomplish something they wanted to do. The latter is more about individuals who have found themselves as part of the same organization, practicing their business together and separately.
This might sound like the former is “good” and the latter is somehow lesser but I don’t mean it that way. Both versions can be run well or poorly. Both versions can be great investors. But they do tend to have different playbooks and implications for founders.
The former usually benefits from collaboration but can suffer from groupthink. The latter can contain constructive competition and challenging thought or just plain disfunction.
The former sometimes has more trouble navigating a generational change or adding new out-of-bounds thinkers. The latter is easier to plug new players into but harder to keep those pieces all together.
The former knows what they stand for and it typically shines through in their brand, but has trouble with self-reflection and leaving the old ways behind.
The latter has more challenge in articulating why they exist beyond the economic motion of venture, but also clarity in the true north of those incentives.
It’s likely an overgeneralization (or just plain incorrect) to suggest the former are collaborative in their decision making around investments whereas the latter is more lone wolf. I’m also hesitant to say that these types of firms routinely divvy up economics differently but consistently within their categorization.
But when I’m talking with a GP, and getting to know their firm as coinvestors, I do find this framework one which I mentally apply to understand how they might ‘get to Yes’ on a portfolio company, what support of that company will look like over time, and what could happen to the startup post-investment if the sponsoring GP leaves their firm.
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Originally published at https://hunterwalk.com on December 24, 2024.
