What happens when you turn $1m into $750m as a Junior VC

The answer will not surprise you + Last week in VC (9/16/2019)

As a VC if you end up leading an investment into a company that ~750x’s and returns the fund, you might expect a piece of the carry or some kind of thank you, but if you were a junior VC when you led that investment, you’ll likely never see anything other than the GP’s new mansions in the Hamptons on Instagram.

Michael Arrington @arrington

I heard that a woman, then a junior employee at a big VC, led investment in @Cloudflare that turned $1m into something crazy like $750m in the IPO. She eventually left that firm, had no carry, and never got a thank you. This is the kind of story I would have dug into @TechCrunch

It’s a side effect of how junior VC roles are usually structured (a nice salary package with no carry and limited prospect at promotion). You get none of the financial upside (carry) and marginally lower downside.

If an investment works out, it’s because the partners approved it (or a partner will try to share/take the credit). If it doesn’t work out, the partners get to diffuse the blame: “it’s the associates fault — they are still learning after all”. To be fair, not all firms/roles are like this, some firms let associates invest their own money into a sidecar vehicle.

Disclaimer: I haven’t verified what @arrington is hearing, but it shows a completely plausible scenario

Last Week in VC

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