Dear SaaStr: What Are the Exit Options for VCs That Fail to Make It in The VC Industry?
There is probably no better business to fail at than to be a failing General Partner at a sizeable VC firm.
If you fail as an associate, principal, etc. … that’s just like any other job. But a little better.
You’re managed out, although usually slowly and gracefully. If you aren’t going to make it as a non-GP, the beauty is, you’ll have 3–6–9 months to go find your next gig. That’s as graceful as it gets. They’ll tell you, “next year we won’t have a spot for you”.
But General Partners … boy you can fail slowly.
VC’s contracts with their own investors (the LPs) last 10+ years (really 13 these days with extensions), and GPs usually fail slowly enough that they are GPs in at least two funds. Add a 3-year gap between funds, and that can be 16 years until you are no longer a General Partner at a VC fund, even if you are a terrible investor.
Of course, you have to do something right to get yourself into that position. And you’ll see “Managing General Partners” often push out other General Partners well before this long.
It’s a business where you make money fairly slowly, and also, fail rather slowly.