What Is A 'Venture Partner' And Why Does It Matter To You?

Author:. Fred Wilson. , VC and principal of. Union Square Ventures.
Source:. What Is A 'Venture Partner' And Why Does It Matter To You?.


A reader asked me to blog about the role of a ... I thought it was a good reason why there are continuing.

Venture Partners - a person who provides the venture capitalist firm in the team to help them carry out investments and manage them, but it is not complete and a permanent member of the company. ... Lawyers do not like the term ...

Venture Partners are different from ...

There are examples of Venture Partners, who were with venture capital firms for many years, so they can actually be a permanent part of the team. But for many reasons, the term ...





My partner. Albert Wenger. is an example of the latter. Albert was the President of Delicious, and when the company was sold to Yahoo!, it leaves a Delicious and starts a company with his wife, Susan, called. Daily Lit. Brad and I thought that Albert could become a great partner for us, but in our first fund was not room for a third partner. We would like to work with Albert immediately. So Albert joined us as a Venture Partner for about 18 months, and then, when we raised our second fund, he became a full member of our company. It was a wonderful way to introduce our company in Alberta.

Venture Partner Award varies by company and performed the role of. Some Venture Partners receive cash, and some do not. Much depends on how much time they spend on us, and how deeply they are involved in daily operations. Venture Partners are all carried interest in the transactions which they initiate and control. The volume of carried interest is also significantly different from firm to firm. Top of the range of about 25 % of the total income of the transaction, which would be 5% of revenue in most firms, since 20% of income is the most common for businesses to venture capitalists. I've heard about companies, where 1 % of the profits or 5% of total revenue - it's what they get Venture Partners. I think it's too little, but guess what others do not think so.

One reason to be careful if you enter as a Venture Partner - is the fact that the firm can not generalize the income which it has no. What I mean by this - is if you create a $ 50 million. revenue for the firm on the deal and so you earn a percentage of revenue transactions in the $ 10 million. you may not get paid this income if the other investment firms are bad, and general fund revenues do not exist. I saw a friend fall, and it is more common than you might imagine.

So, if you - the entrepreneur, why you should worry about Venture Partners? . So, you need to understand all the ...

On the positive side, many Venture Partners are experienced, the same as a venture capitalist or successful entrepreneurs. They probably will not be ... So when you make a deal with Venture Partner, you may sign a deal with the safe and successful and experienced person who can help you.

On the negative side, they are not full members of the company, so their credibility within the company may not be as complete as you might wish to. The result of this difficulty may be in the next rounds, and other important and decisive moments. And they can not stay attached to the venture capitalist firm for the duration of the existence of your company. That means you can get someone else who will direct your investment down the incline. And in my experience, it is almost always a recipe for disaster. Not much there things worse for an entrepreneur than someone else who has received at the disposal of an investment that is not funded.

So, if you make a deal with Venture Partner, you really need to understand his or her particular situation. Need to estimate how likely they would be with the firm from seven to 10 years, when you need them. And you need to assess whether they are influential in the firm, and how likely they would be able to support you when you need it.

I'm a fan of the model Venture Partner. We used it with great success with Albert and I can easily imagine us doing it again. It works well in the right situation with the right people. But there are risks with the model for a Venture Partner, venture capitalist firms, and most importantly, for the entrepreneur. Thus, it is important to understand the role and what it means for you.


Translated for the blog dennydov. blogspot. com.
Alexei Liapidevskii.


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