a16z Podcast: How To Understand And Choose a Venture Investor

Incentives matter. So understanding the incentives of venture capitalists will help you decide if raising money from a venture investor makes sense for your business.

In this first of a 3-part series (which originally aired as YouTube videos), a16z Managing Partner Scott Kupor talks with Frank Chen about how venture capital works: how the money flows, what Limited Partners (the organizations that invest in venture capitalists) are looking for, what differentiates the top investors, and what all of this means for an entrepreneur raising money.

In this episode, Scott and Frank discuss:

  • Why the world needs venture (risk) capital
  • Where venture investors get the money to invest
  • Why venture investors only fund companies with large market sizes
  • When fund raising, does it matter how old a fund is (how far along in its so-called J curve)?
  • Should you care how much money a specific General Partner has invested in a fund? Or whether they have governance rights as well as an economic interest in the fund?
  • How do corporate venture investors have similar and different incentives from pure financial investors?
  • Can’t entrepreneurs just crowdsource both funds (for example, with an Initial Coin Offering), advice and connections? How useful really is a venture investor in the era of crowdsourcing?
  • What are 3 ways venture investing and entrepreneurship evolve over the next 10 years?

Want to learn more? Read Scott’s book “Secrets of Sand Hill Road: Venture Capital and How to Get It“.

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

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