The Importance of Unit Economics
The unit economics of a startup determine its success. The stronger the unit economic case, the higher the margins, the faster the company grows. In analyzing a startup, measure the unit economics regarding customer acquisition cost and lifetime value. Calculate it at the unit level to understand the health of…
What Is a Fund of Funds
Unlike most venture capital funds that invest in startups, a fund of funds invests in other funds that invest in startups. Instead of investing in multiple funds, an investor can gain diversification by investing in a fund of funds. As with all good VC funds, there's limited availability for investors…
The Fallacy of Stealth Mode
Startups often choose to stay in stealth mode in the early days to protect their idea. In most cases, stealth mode doesn't help the startup and can actually hurt it. Here's the downside of going into stealth mode: It's difficult for others to help the startup because they don't know…
How Limited Partners Select VC Funds
Limited partners consist of pension funds, university endowments, family offices, and high-net-worth individuals. Here's how LPs select VC funds for investment. Track record. The VC must have a track record in the form of an IRR, TVPI, or MOIC metric. Ability to deploy capital. The VC must be able to…