How the Hell Do VC's Actually Make Money
Also - Emory Salute to Service Event Recap, Upcoming Warrior Summit at Army Navy and Hot Job Openings
Hey All!
We are almost to Thanksgiving! I can not tell you how much I am looking forward to some time off. My family (including in-laws) will be taking a cruise down to the British Virgin Isles and I am looking forward to watching some football on the boat and just chilling out in general. Prior to heading out on this cruise, I will be flying up to Pittsburgh where I will be the guest of honor for the veterans gala at the Tepper School of Business. Once I am done there, I’ll fly down to Orlando to start the Thanksgiving break.
This has been a busy couple of weeks for me. The Friday prior to veterans day, I was at Emory University Goizueta School of Business as the keynote speaker for their “Salute to Service” event. We had over a 100 people in attendance and it was a cool opportunity to talk candidly about the challenges and opportunities in building a platform like sitreps.
The Monday after that, I then spoke to the University of Texas McCombs school of Business Veterans Club.
My business partner Wyatt also hosted a USC/UCLA Sitreps meetup as well. So appreciate everyone coming out!
Broadly, at each of these events, I tell veterans the same four things.
Your service is appreciated and it will open doors, but you need to step through those doors and perform. Your co-workers will not care that you are a veteran, they will care if you can perform the job you are hired to do.
There is no work life balance, there are work life tradeoffs.
Nothing is more important than your family
If you build something interesting, a network will come to you (as opposed to you trying to build a network through networking phone calls).
For this weekly sitrep, I want to talk about venture capitalists (VC’s) and how they make money. It’s a super interesting career that sounds very sexy, and I see a lot of veterans attracted to it for a bunch of reasons. It is however, not a get rich quick type of career. I also want to dispel the myths that raising venture capital is always a good thing. From the founder side, giving away part of your company to VC’s has a lot of tradeoffs, and it’s important to understand how their investment changes the calculus for growth and wealth creation in your company.
But first…
Warrior Class Army Navy Game Summit!
Before we get to that, I wanted to talk about two things. The first is that we are hosting the “Warrior Class” Business and Policy summit the Friday before the Army Navy football game at Georgetown University. This will be the second year in a row that we have helped host, and have an all star line up of speakers ready. If you are interested in joining, please register here!
Also, with the Presidential election now in the rear view mirror and the incoming administration policy positions starting to take shape, I thought it would be useful in the near future to talk about how Trumps policy changes will affect the broader labor market. Broadly, the #1 mandate Trump was elected on was to reduce inflation and get the labor market moving again (in terms of increased real wage gain etc). So in the coming weeks here will we talk about how his publicly announced policy changes will affect the economy.
Articles I found Interesting Last Week
WSJ - Eight Lessons From 11 Years of Writing About Work and Life
WSJ - How Democrats Blew It on Inflation
WSJ - A $12,000 Surgery to Change Eye Color Is Surging in Popularity
AP - Biden authorizes Ukraine to use ATACMS
Air and Space Forces - Silver Star Airpower: Inside an F-15 Mission to Block an Attack on Israel
Sitreps Job Postings!
Check out our latest job postings here! Most of these roles are focused on Defense Tech. We even have a General Manager role located in Princeton if you are interested in relocating to the Garden State. Shoot us an application and if we think it is a good fit we will reach out.
How the Hell do VC’s Make Money?
“We’re excited to announce a blockbuster $100M raise led by (insert random semi-edgy name) ventures.” You’ll see this at least once per week on Linkedin if you’re following anyone within the VC or startup ecosystem. The framing always denotes success, and the long list of comments you see underneath suggest it’s something worth celebrating, from the sycophantic “Wow! Gizmotrixo’s UI enhancement tool for crypto broker call centers is a REVOLUTION! WHEN MOON!?” to the more typical Linkedin autoreply “So cool!”
So what is actually happening here? What does this raise actually mean? Should you actually celebrate a raise?
To answer these questions let’s break down what a venture capital firm is and does. I get a lot of followers asking about breaking into VC. Most are drawn in by the feelings of excitement, curiosity, and innovation that the venture capital and startup ecosystem conjure up from the outside looking in. It seems like a job where every day is a new adventure as you discover the next Facebook, Onebrief, Vannevar Labs, or Uber. And VCs get filthy rich, right?
To use a phrase more popular among consultants than ever-confident VCs, “it depends!” I’ll break down where VCs find their money, how they make their money, how their relationships with entrepreneurs actually function, and why the announcement of a raise can be as much a curse as a blessing.
Where Do VCs Get Their Money?
Limited Partners (LPs) and General Partners (GPs)
Keep reading with a 7-day free trial
Subscribe to The Weekly Sitrep to keep reading this post and get 7 days of free access to the full post archives.