The document compares the venture capital industry to the drug trade. It outlines the major players in the industry as suppliers of capital (endowments, pensions, family offices), venture capital firms that lead investments, and startups. It notes that venture capital makes up a small portion of overall institutional investment portfolios. Lead investors help companies with strategy, due diligence, and take board seats, while co-investors do not provide as much support. Investors only invest in deals that fit their existing investment thesis at an acceptable valuation and size.

1. The Rock
by tijan watt

2. What your pitch is

3. Venture Capital is
like the Drug Trade

4. The Columbian Drug Lord
Suppliers of Capital

5. Endowments
Pension
Funds
Familly
Offices
Foundati
ons

6. Median
Portfolio
Other
1%
VC / PE
27%
Real Estate
2%
Hedge Funds
18%
Global
26%
Fixed Income
12%
Equities
11%
Cash
3%
Source: Annual Financial Statements for Libra Foundation, Skoll Foundation, Rockefeller Foundation, Omidyar Network, Ford
Foundation and Schmidt Foundations
VC is a small part of
the overall portfolio

7. “The Connect”
Fund Management Companies

8. Top Quartile Venture Funds
outperform the industry as a whole
New fund managers must bump-off
the old fund managers (through a
unique investment thesis) to get
access to capital

9. ai
blockchain
autonomous
food
new general markets
global
biotech
venture studios
accelerators
female founders
dorm room
equity crowdfund
clean-energy
complexity

10. The Dealers
Venture Capital Firms

11. Investors form part of
a network
KPCB
NEA
Sequoia
Venrock
aZ16
slow ventures
DST
Accel

12. Lead Investing

13. Investment Thesis: The fund’s
positioning to LPs determines which
deals they focus on
Relationships: Prior relationships
with founders and advisors can
create affinity
Special Interests: Geography,
Ethnicity, and other interests play a
role

14. Active Role: Lead investors help with
strategy, perform due diligence, and
serve on the board and help invite
other investors into the round
Investment Strategy: Lead investors
have an intuition about how to make
the company grow.
Commitment: Lead investors make a
significant investment in time and
capital

15. Co-Investing

16. Piggybacking: Co-investors do not
take board seats and do not
influence the company
FOMO: Co-investing can be window
dressing to be able to claim they
were in on the deal
Trust: Many co-investors don’t do
due diligence but rely on the work
of the lead

17. The Junkies
Startups

18. No inbound Interest: Some investors
may not take inbound deals due to
adverse selection
Thesis Fit: Investors will not invest
if the deal does not fall into their
pre-existing investment thesis
Size: Investors position along the
sector, stage continuum. The size
has to be right

19. Valuation: Valuation is based on the
the clearing price for the investor
who is the least willing to pay
Oversubscription: Oversubscription is
necessary to maintain a valuation
Validation: Investors are herd
animals

20. thank you!