Capital Light Startups and Small Funds

Continuing with yesterday’s post Thoughts on Boston’s New Pillar Fund, AVC has a great post up today titled Small Ball where he highlights a few of the benefits of being small in the startup and venture capital world. Here are a few takeaways from the post:

  • Some of the best USV investments were in startups that didn’t need to raise money or raised a single round
  • Founding teams that owned 50%+ at exit were often focused on a revenue/business model at launch and stayed very efficient
  • Large funds have a really hard time returning 3x the fund due to the law of large numbers (if it’s a $1 billion fund, it needs to generate $3 billion in returns — an astronomical number)
  • Small funds, while still difficult to generate 3x, are able to do well with smaller exits, which are much more common

Go read Small Ball and spend time in the comments to get even more perspective.

What else? What are some more thoughts on capital light startups and small funds?

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