By Hadley Harris, Founding General Partner
Each year since 2001, Forbes announces their Midas List of the top 100 VC’s in the world. It is an esteemed award filled with the biggest names in venture capital.
But my partners and I will never be on this list.
The way we set up our business makes it impossible for any of us to even be considered. And we’re cool with that. Don’t get me wrong, the team here has nothing against the Midas List. We celebrate many of our strongest supporters and mentors who have been well-deserved honorees.
To understand why we’ll never make the list, it makes sense to first explain how most VC funds work. There’s a spectrum, but generally, they take a very siloed approach. Each investment is attached to a single partner who basically owns that company at the firm, through the good or bad, and for the rest of the company’s existence. Their salary, position at the firm and much of their reputation in the industry are almost exclusively tied to how the companies they “did” fair.
When establishing Eniac, we wanted to build something different, to innovate on the traditional VC structure. Having raised over $60m in venture capital as entrepreneurs, we were intimately aware of the pros and cons of the traditional model. That’s why at Eniac we don’t compensate, share externally or even keep track of who sourced or has worked most closely with each portfolio company. This is a core value we don’t compromise. When we were raising our 4th fund, several of our largest LP’s asked us to list which partner sourced or was on the board of each company. We politely declined.
This team approach drives how we source potential opportunities, due diligence and engage with our portfolio companies.
Other investors and folks in the ecosystem often ask me who at Eniac they should share opportunities with based on sector or geography. The answer is that it doesn’t matter. We are a team and maintain a shared pool of investment opportunities.
Instead of spending most of the diligence process working primarily with one partner, we ask founders to meet individually with each partner so each partner/founder can really get to know one another. When it comes time for us to decide whether to invest, all decisions are unanimous. This is especially important with our model as it ensures all partners are excited to work with all of our companies.
After moving forward with an investment, we work with the founders to assign an Eniac GP as the starting point person. If we’re on the board, as we usually are after leading a seed round, the point partner serves as the board member. Over the lifetime of a portfolio company, we encourage as much interaction as possible between each company and our whole team. Since all 4 GP’s share in the results of all our portfolio companies equally, we’re all incentivized to help out all companies as much as possible. Additionally, we often swap which partner is the point on each portfolio company to marry the needs of the company at a given phase of its development with the skill sets of each partner.
Because all our partners have known each other for 20+ years and are equal founders of the firm, we’re in a unique position to be able to run Eniac with this model. There are a lot of incredibly successful funds built on the traditional siloed model, but we think our collaborative approach provides the best experience for the founders we work with. And, if we seed the next $100 billion business and the folks at Forbes feel like we need to be on the Midas List, I guess they’ll just have to make us a 4-for-1.