The Business of Venture Capital, 3rd Edition

7Generational Transfer and Succession

“Succession in venture funds is like a Shakespearean tragedy — it involves money, ego, fame, and emotion,” says Paul Holland of Foundation Capital. Some describe the adrenaline-laden world of venture investments as in the song “Hotel California” — where you can check out any time you like, but you can never leave.

Hanging out with cool kids, doling out large sums of money, playing rich Daddy power trips, and feeling mighty invincible can be heady. Yet how best should you plan to get out? And where do you go from the world of venture — where you get to see a thousand great startups each year? Most career paths sound mildly interesting after venture, and worse, you might be ill-qualified to do any meaningful operational role.

MANAGING SUCCESSION - NOW MY WORK IS DONE

Succession and generational transfers in venture firms is hard — nearly impossible. When firms are successful in generating returns, ego and greed take over. Rainmakers and top performers get the “God” syndrome, and they are the ones carrying the weight of this world, while others are socialists. Even the legendary investor Warren Buffett has not been able to find a suitable replacement to run Berkshire Hathaway and continues to run the firm at the age of 89. But Sequoia Capital has mastered the art of passing the baton to the next generation without missing a beat — over the past nearly 50 years, Sequoia has done it not once, but twice.

When Don Valentine decided to start ...