Tuesday, March 06, 2007

Introduction to Venture Capital

Today, I guest lectured at Stanford University.

The class, the Entrepreneurial Engineer, is a graduate course for engineers interested in starting their own companies.

The professor, Roger Melen, asked that I provide an overview of the venture capital industry, insights into the venture process, and a suggested play book for entrepreneurs looking to raise venture capital.

While a well-covered subject, I attach my slides for review and discussion. Also, if widget fails to load visit:


  1. Interesting slide show Will, I'm curious though how the mechanics of the management fees work. Do you simply hold out a portion of the fund from investment to pay the fees or do you invest it all and the companies pay a fee back or is it something else?

  2. Hi Brad,

    The former is the answer, the fees are held back. The princpal, net the fees, is invested, however, all the monies - principal, plus fees must be returned to investors before carried interest kicks in.

    Certain top firms can start paying carried interest from the first dollar of gains, however, if the whole fund is not returned by the end the carried interest paid out can be "clawed back" by the LPs

  3. Would it be oversimplifying things to say it seems as if the fees are more like a guaranteed payment to the firm in the event the fund didn't generate any carried interest?

    Thanks for the explanations!