Brick by Brick - #4
Reads, resources & insights about building a VC firm 🧱 by 🧱
Wishing you happy holidays 🎄🎅 and hope you have a great end to your 2022.
This month’s Brick by Brick is a bit shorter as it’s a busy time for all of us before we shut down to recharge our batteries. That said, we’re already excited for what 2023 brings - amongst others, there’s many things we’re working on that we look forward to sharing with you in Q1 and beyond.
All the best to you and your loved ones from team DV (Sydney, Daniel and Pascal)!
🏗️ Firm Building
Useful nuggets published on venture firm building.
1. Ten (Hard Learned) Lessons From Building Fifth Wall
Watching time: Depends on what lessons you find valuable 🤷♀️
Fifth Wall went from 0 to $3.25B AuM in ~6 years, Co-Founder Brendan Wallace did a LinkedIn video series talking about 10 hard learned lessons from building Fifth Wall into the juggernaut it is today - check it out for yourself here.
And while we’re at it - Eric Tarczynski from Contrary’s 5 lessons we’ve learned from building a venture fund from scratch are also worth a read.
2. Why VCs Explaining “It Was Only 4% Of Our Fund” Is Misleading Minimization When a High Flying Startup Implodes
Reading Time: ~3 mins
As always, Hunter does a great job at outlining why when a big startup implodes, there’s much more to it than their investors “just” losing the money they put into it. Reputation cost, opportunity cost of time, follow-on capital, burden on relationships, disappearing TVPI and it’s impact on the fund performance, etc - best to read it for yourself here.
Image: A giant pink pencil eraser rubbing out a unicorn, digital art [DALL-E], as posted in Hunter’s blog post.
3. The State of Gender Compensation in Venture 2022
Reading Time: ~5 min
Tl;dr - firms with smaller AUM are failing! Among the insights, the survey found:
Particularly at the managing general partner level, women at smaller AUM firms received significantly less total cash compensation than men. This disparity at the general partner level has widened slightly compared to the previous year but lessened for women at the director level.
At larger AUM firms, women at all levels received pay more in line with what men received, with the median total cash for women managing general partners above that of the men.
Women at larger AUM firms also earn a higher median-level percentage of carry but significantly less at the maximum level, while women directors/principals earned slightly more carry than their male counterparts.
Over half of survey participants said their firms have policies and programs in place to promote diversity in recruiting and career development.
For more, check out First Republic’s report here.
🤝 For Your Founders
Reads we’ve shared with our founders this month.
1. Airtable's Path to Product-Market Fit
Reading Time: ~10+ mins
FirstRound launched a brand-new series on product-market fit with the first edition sharing insights from Airtable’s “long, early gestation period” to their “aha” customer moment when they found traction. Great read, check it out here.
2. Carta’s 2022 Annual Equity Report
Reading Time: 10+ mins
Carta has been partnering with #ANGELS since 2018 to report on equity distribution. On top of their historic reporting on e.g. gender, race, who’s exercising equity, etc, they’ve also been able to share expanded geographic data this year to see where in the United States people are more able to participate in the startup and venture ecosystem, how various metro areas compare, and many other things. For more, check out their report directly here.
3. a16z’s Guide To Growth Metrics
Takes ~30 seconds to get the data
a16z Growth just released their guide to growth metrics for B2B companies, based on their data and “investing team experience”. Takes <30 seconds to get benchmarks on growth, retention, margin, sales & business efficiency, etc. Check it out here.
Big caveat: data is from 2014 through 2021 (RIP good times).
🤨 Something Fun
Fun and (more or less) useful things we’ve read this month.
1. Consuming Content and Remembering It
Watch Time: ~15 mins
Anyone else read something super interesting and forget about it the next day? Yeah me neither…😏
This video from Ali is a great starter kit for all things productivity. In fact, it was the catalyst for Sydney to finally start using ToDoist ✔️. There are lots of gems in the video - a highlight is the piece on content consumption (video mark ~10:30). The tool trifecta of using Pocket (read-it-later app), Readwise (highlighting / note reference), and a personal Notion page to organize / reference all of her highlights and saves is Sydney’s weapon of choice now, inspired by this video 🤓.
Quick Tip: Sync your Readwise to Twitter and bookmarked tweets will go into your Synced Notion automatically so everything is in one place!
Happy life organizing!
🤔 What We’re Thinking Through
Venture firm building topics that are currently top of mind for us at DV.
There’s a lot we’re thinking and working through atm - stay tuned as we’re planning on writing more in-depth pieces about it next year 👀.
For now, we’d just like to say thank you to everyone who’s been a thought partner / shared their view with us on firm building related topics over the past weeks and months 🤝.
⏩ Follow-Up From Last Month: Onboarding
We see many newsletters with asks / call-to-action yet there’s rarely a follow up. We aim to do better.
From last month’s newsletter: Founder Onboarding
We’re currently working through upgrading our founder onboarding experience / process, in a way that is authentic, fulsome, and engaging while also trying to make sure we start off the partnership on the right foot vs. all the onboarding tasks / an extensive onboarding document feeling like a burden.
A structured and valuable (for founders) onboarding seems to be a top of mind topic for lots of you. As we spent a bunch of time working through ours over the past few weeks, we decided to write a more in-depth piece on this topic early next year.
That said, if this is something you’re thinking through as well, we’d still love to trade notes - just hit reply 👋
👋 Get in Touch
Want to chat about venture firm building, come across great articles to include in this newsletter, have feedback for us or want to catch up potential deals, please reach out!
Quick reminder: We, Darling Ventures, focus our investing on backing cutting-edge software startups in the US and Canada who are reinventing businesses and our roles within them at the Pre-Seed with checks up to $750K. Led by founders with a strong moral compass.
Solid content. I love the Airtable story...shared it out with the High Alpha Innovation Team & Network. Thanks for sharing and hope all is well, Pascal!