I couldn't agree more; I learned this while making limited partner commitments at KEC Holdings. In fact, on my very first day on the job, Monday, December 1, 2008, my very first assignment was a call with my boss, jeffrey citron, for a possible high 7-figure commitment to an emerging venture manager raising a fund 1.
It was my very first assignment, on my very first day at work as an investor. Before that I had been an actuarial analyst, and then a data analyst in HR in the financial services.
Over my years at KEC Holdings, and later at KEC Ventures, I learned the lesson Harry is highlighting; Early-stage venture capital is about harnessing uncertainty in order to generate outsized returns, and the best managers have learned how to repeatedly harness luck and systematically manage chaos in their favor.
With the exception of Team Risk, this is more important than nearly any other issue an LP could focus on when it comes to assessing emerging managers, particularly those raising their first institutional fund. But, it is also the one most likely to cause the most discomfort because it so ambiguous.
Ps: I have the experience to prove it. Basically every fund we backed in that period is now a household name in it's area of specialty. Of course, there are a few we missed, but you can't get them all right all the time.
Two questions every LP should ask VCs but barely ever do:
1. How do you find and win the best founders before anyone else?
2. If we all appreciate this is in part, a game of luck. How do you increase the chances of luck hitting you?
If you don’t have an answer to both, it will be hard.
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2moLove this! ⭐️ Thank you for sharing!🎉✌️