The Way Hong Kong VCs Should Be

This is via Chris Dixon’s blog, discussing the development, or perhaps innovation, of VC firms:

Earlier this year I got to meet the a16z team and observe the operation directly. There are over 60 people at the firm. Only six people do traditional VC activities: investing, joining boards, and helping out. The rest are exclusively focused on helping entrepreneurs.

The “startup idea” behind a16z is: instead of spending the bulk of the fund fees on partner salaries, spend it on operations to help entrepreneurs. There is a marketing team (=helps you get noticed), a talent team (=helps you recruit), a market development team (=helps you get customers), and a research team (=helps you figure stuff out).

Spending time there, I had the same feeling I have whenever I meet a great startup: “This is obviously the future, why didn’t someone do it before?”

This sounds like a dream VC firm. We can dream all day, right? This kind of firm requires partners who are more interested in the development and success of startups (which will lead to financial success), than simply making a quick 15% return on investments. The idea appears pretty simple, put together an experienced team of people who specialize in certain aspects of a startup: recruiting, marketing, research, etc.. Hell, it’s so basic it’s Adam Smith. Instead of having one VC guy show up at your garage once a month in his Ferrari, who is expected to assist in all these areas, you get a team of 10 people who, specializing in one particular skill, assist you in say, recruiting new talent from universities, as they have helped previous startups. The team will have deep knowledge and resources in exactly what you need, and the VC guy will put it all together. The startup will receive a much better service in exchange for their equity, the VC firm will operate more efficiently, will develop a much more competitive startup, and in the end, the VC will put more money in the bank through a higher valuation at selling time. Everyone wins. Let’s all hope this is the model a few Hong Kong VC firms will take up.


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