Auren Hoffman has a great Quora post here
, in which he points out that few venture capital firms follow the advice they give to their own portfolio companies. More broadly, VCs do very little to build long term equity value in their own firms. This is puzzling. Auren notes that the top private equity firms do
do this, which seems like a hint that it’s not impossible.
Traditionally VC has been a business that requires superstar partners to attract and pick the best investments. And superstars, understandably, want to capture most of the upside from what they do - which doesn’t leave firms much room to invest in the future. That’s why firms that are exploring ways to do VC systematically
are so interesting. Social Capital’s recent “capital as a service
” experiment is fascinating - and Y Combinator and Angel List are arguably two of the most important disruptions to VC over the last ten years. And, of course, that’s exactly what we’re trying to do at EF and why we raised venture capital ourselves