The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies, 2nd Edition

Afterword

You're still here?” asks the perplexed protagonist in the post-credits coda to the 1986 comic masterpiece, Ferris Bueller's Day Off. Shuffling closer to the camera, a befuddled Ferris tells the audience, “It's over. Go home.” Then walking away, he gives one final backwards glance and echoes, “Go” with a dismissive wave of his hand.

Now those of you who've made it this far in this book have been exposed to a soup-to-nuts look at the innards of the venture capital business. You're now equipped with a roadmap for becoming a venture capitalist (VC). “Go,” says Ferris.

But wait a second! Not so fast! This book, as comprehensive as it may be, is but one of dozens of books that give a roadmap for how one might become a VC, but none of these books really ask a far more daunting question: why?

After all, as an institutional investor in venture capital funds, I am ever-mindful that I'm signing up for illiquid, opaque, difficult-to-exit partnerships that typically last twice as long as the average American marriage. In whom I'm investing becomes almost as important as in what. After all, I'm one degree attenuated from the actual assets. You invest in the company, but I invest in you.

And indeed, when I consider a fund investment, my own idiosyncratic evaluation process focuses on four things: the people, the strategy, the portfolio, and the track record. Of these, track record can be the least instructive, as it is often a lagging indicator, not a leading one (I'll note that's ...