Just came here to submit this. It's a fascinating development. He's pulling an end-run around mid-level VCs.
Tim has a good eye for startups + the ability to personally boost their efforts + get them publicity. Now he can get them money without the hassle of individual negotiation with investors.
Can someone more knowledgeable comment: is there a maximum amount of money this can be used for? Or could this conceivably be used for much larger rounds as well?
I think, he meant a VC fund will be worth 100m. and then it will fund 100 startups, with 1 mil each. VC's will be looking at aggregates, to present to their LP's.
It's pretty common for VCs to have the company being invested in pay for legal/research/etc. expenses out of the investment amount -- so you raise $500k and immediately pay $50k back to the VC for their costs.
It's weirder here due to the small scale of investment relative to the costs, and the non-cash services, but not totally implausible.
1.5 is small compared to the war chests Apollo, KKR and the like amass, but it's huge for a VC accustomed to writing smaller checks. Average US VC find is 107mm.
They're either going to be doing way more deals or shifting some of the fund focus to later stage. I expect the former, given that investors seem to like the granularity of separate venture and growth funds to pick from.
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