Barry Eggers, very insightful post. One more concept to note: the need to understand the liquidity profiles of your LPs. When there is a market correction, the institutional LPs will likely be able to more easily fund their capital calls than high net worth individuals or less-sophisticated family offices. Even then however, the institutional LPs who are too heavily illiquid will also be in trouble.
Another important question to ask: how much are you required to distribute to beneficiaries each year? Sovereign wealth funds, endowments, pensions, high net worth individuals, etc. will all have different liquidity profiles that can affect their abilities to meet capital call requirements during market downturns. One only needs to look back ten…
Who am I to disagree with Marc Andreessen… but I don’t think the successful venture capitalists and value investors are really that different. They’re the ones accumulating the greatest gains in their respective markets, finding the undervalued or overlooked opportunities. To say the difference between the two is the direction of their bets on the future is the wrong way to characterize it.
Can you explain how being API-driven allows for a business like Amazon to avoid the pitfalls that other conglomerates have faced? Is it a matter of other ones just not following their own rules of engagement?
It may be too early to say whether they were successful, but Y Combinator’s Startup School and the Techstars Anywhere program seem like steps in the right direction.
The issue of mobility still arises however — though modern air/auto travel as well as the internet erase lots of barriers, it’s still no substitute to knowing…
I would also have to add, at these fund sizes I would guess the funds would most likely be geographically-focused. It would be difficult for managers to conduct diligence on potential investments and spend significant time (and money) on the necessary travel.
Interesting article on investment vehicles like these that fly (relatively) under the radar.
Thank you for the explanation and clarity as well around that aspect of your strategy. Deciding who receives follow-on capital seems like a different strategy in itself, and are perhaps best left for different vehicles or “opportunity funds”.
I find it interesting that you focus on protecting the downside risk, and do so…