What is the role of a general partner at a VC firm?

echojason@gmail.com'

JASON LEMKIN

It can be frustrating to be part of large venture firm, be the junior guy that “found”/sourced Facebook-Snapchat-Pinterest-Twilio-WhateverUnicorn, convinced the founder to take the money … and then see the General Partner take all the credit.

Did they even do anything?

Well … yeah.

Remember. VC Firms are investment firms. Money managers.

GPs:

  • Raise the fund. Folks. This is >hard<. Harder than it looks. Because of this, one rule controls: you raise the fund, you make the calls. And LPs not only want to invest in a relatively small group of VC funds, in particular, they are picking >specific< GPs at those funds to really back, in most cases.
  • Make the call. Yes, you sourced Facebook. But 1000 other deals were also sourced that year. Who makes the call at the end of the day which one to do? The ones that raised the fund.
  • Close. A lot of times, only a brand-name GP can close a good deal. In competitive deals, closing is more important than sourcing. In non-competitive deals, the converse is true.
  • Structure and deploy the entire fund. In a big fund, even 2 or 3 unicorns sometimes aren’t even enough. The GPs have to manage billions and turn those into more billions. It’s a big chess game, that unless you are in The Facebook Fund or The Uber Fund, or in a fairly small fund, one deal alone won’t be enough. And even if you got into Cruise or Jet or WhateverCorn, if you only bought 1% or 3% or whatever … that won’t move the needle. The GPs have to figure out how to deploy it all.
  • Build the team. This is very hard in partnerships.

The GP-Non GP relationship can be frustrating as the non-GP begins to win and spread her wings. The “part of the management company” vs. “not part of it” relationship can similarly create tensions.

But look at the above four bullets. He (and yes, it will statistically almost always will be He, at least for now) that does all 4 of these bullet points runs the place. No matter how it may look on the website.

View original question on quora

Published on September 9, 2016
Share This