Everyone is a VC
b'When I look through my LinkedIn network these days it appears every fifth contact is a venture capitalist of one kind or another.\\xa0When I started in the early stage funding world 20 years ago, the VC was a rare breed who had access to venture funding. Most of them were in a handful of tech clusters in the US - Silicon Valley, New York, and Boston to be exact and they were few and far between. At that time, a typical VC had a $100M fund or greater which they raised from LPs or limited partners - primarily the pension funds.\\xa0They operated in ten year funding cycles which means they could run a long ways off one good return. They charged 2% management fees and a 20% carry. In the 2000s angels grew to prominence because the cost of starting a business came down so much, startups no longer needed $5M to start a web business but could now do the same thing for $500K.\\xa0Angels became attractive financiers because they were more numerous and easier to access.\\xa0 Today, MicroVC, NanoVC, Venture Studios and Corporate VCs are coming onto the startup scene with new fund sizes and funding models. MicroVCs raise $25M to $50M fund while NanoVCs raise $10M to $15M funds.\\xa0 Aside from the size of their fund, the main difference is that Micro and Nano VCs typically target a narrower criteria- either a specific geography or type of deal.\\xa0 Many use the pledge-fund model which means each deal the VC wants to fund must go through a screening process by the limited partners.\\xa0\\xa0 Because the fund size is small most MicroVCs are taking 3% in management fees and a 20% carry. Given the size of the fund, they can only invest in 5-10 deals.\\xa0The fund lasts only a few years before it\\u2019s time to raise the next one.\\xa0 They raise primarily from family offices and high net worth individuals. Then there is the Venture Studio model. This type of VC essentially builds a team from which they launch a startup with an ecosystem of providers.\\xa0This works well for one stripe zebra startups that provide niche products or services as they can tie into a bigger team with more resources.\\xa0\\xa0 Finally, there is the strategic or corporate VC which seems to be popping up everywhere.\\xa0 A venture fund provides a competitive advantage for burnishing the company\\u2019s brand and selling its product. They invest for strategic reasons rather than financial ones in most cases.\\xa0 Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding. Let\\u2019s go startup something today!'