Can we fully automate startup investing? It depends on the fund size and target stage. Here's a simple framework and the most suitable approach👇
#1 Micro/Solo GPs ➡️ Traditional (and Quant Followers)
📌Highest diversification (30+)
📌Tiny tickets (few hundred k)
📌Tiny funds (tens of millions) and little management fees
📌Flexibility to lead/co-lead/follow
📌Strong focus on geo/sector/communities/business models/etc.
📌Sourcing, screening, and access are key
#2 Early ➡️ Augmented (and Quant Followers)
📌High diversification (30-40)
📌Small tickets (few millions)
📌Small funds (100-300m) and okayisch management fees
📌Focus to lead/co-lead
📌More generalist focus
📌Sourcing, screening, and access are key
#3 Boutique ➡️ Traditional (and Augmented)
📌Medium diversification (20-30)
📌Medium tickets (few millions to few tens of millions)
📌Medium fund size (200-500m) and medium management fees
📌Focus on lead
📌Thesis-driven and medium focus
📌Sourcing, screening, access, and portfolio value creation are key; rely heavily on their reputation
#4 Multi stage = Combination of Early + Growth
#5 Growth ➡️ Quant (and Augmented)
📌Low diversification (10-20)
📌Big tickets (tens of millions to hundreds of millions)
📌Big fund size (billions) and big management fees
📌Focus on lead/co-lead/follower
📌Thesis-driven and medium focus
📌Screening, due Diligence, access and portfolio value creation are key; price matters a lot
Read the full story in today's episode of Data-Driven VC