I've considered this model before. Redistribute some % of fund carry to founders who don't have good exits. The goal is similar to having founders take $$ off the table in later rounds: encourage risk-taking and swinging for the fences w/some safety net if things don't work out.https://twitter.com/zackkanter/status/1065436575738281985 …
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FWIW it's hard to make numbers meaningful. Ex: - $50m fund, 35 investments - 3x return -> $20m in carry - Allocate 20% to founders in bottom 60% of companies - Assume 2 founders/co --> ~$100k per founder BUT that's ~10 yrs after they started co, and 3x fund isn't an easy target.
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Replying to @lpolovets @zackkanter
I wonder if you could reserve pro-rata for founders though? Like, suppose a portfolio had a norm of reserving 1% in all rounds for portfolio peer founders. This would be capital efficient (paid by founders; would only invest in companies which were near top of distribution).
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Replying to @patio11 @zackkanter
I'm not sure what you mean. How would people know which companies to invest in and which companies not to invest in? Wouldn't investing in the fund be more efficient?
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Replying to @lpolovets @zackkanter
I’m imagining some scenario where founders from the 2019 class have the option of investing in rounds in 2024, by which time there should be some pretty material signal on the likely winners.
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Replying to @patio11 @zackkanter
It's still risky though. E.g. what if we invested in Theranos or Fab, and those looked like our big winners for a while?
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Good point. (Silly me brain was implicitly assuming “Good thing nobody ever lost money in growth rounds.”)
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