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.

    This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/.

    Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

    Want more a16z?

    Sign up to get our best articles, latest podcasts, and news on our investments emailed to you.