Venture Capital 101: How a VC fund works

A General Partner (GP) raises a fund (say $100 million) which is usually a 10 year partnership between a group of Limited Partners (LP). This limited partnership of typically involves about 10 investors.

All the investing is made in new high risk ventures over the first five year period during which time the GP draws down the funds promised by the LPs ($100 million) at the rate of $2 million/year

The second five year period is the harvest time (although there might be some follow-on investing made during this time as well).

The ventures need to execute the 'exit' part of the strategy and the GP starts returning funds to the LPs.

The GP charges a management fee of typically 2%/year of the total for the first 5 years.

This management fee declines at a linear rate to zero over the second 5 year period (or a percentage of the assets is the consideration if those assets haven't been sold yet).

If the fund has doubled in value as a result of all of the exits (ie. $200 million), the LPs get all of their principle back plus all of the management fees.

Of the remaining $100 million, the LPs get 80% and the GP gets 20%.

See more at: http://www.mycapital.com/VenetureCapital101_MyCapital.pdf

Social Media and the Dispersion of Authority

McKinsey's article on "Building Private Sector Diplomacy" has interesting implications for all organisations. http://www.mckinseyquarterly.com/Building_private-sector_diplomacy_2450

Social media has 'dispersed authority' and customers and stakeholders are now not merely 'price-takers'.

Engaging with customers/clients is now truly about 'inter-action' and the more flexible and responsive an organisation is, the better it will survive change.

Technology Disruptively Enhancing Education

Learning material away from the class room using technology and using the classroom to reinforce the learnings is so simple yet so effective.

Instead of trying to focus on what the teacher is saying with the distractions of the classroom and then staying up too late trying to solve the homework problems by texting, IMing, Facebooking and calling friends for the answers is the 'old way' of learning.


The smarter way to use technology such as the iPod or any delivery mechanism on a computer is for the material to be delivered in a format in which the student can listen and learn at their own pace, and in their preferred environment (like the bean bag in the bedroom without the distraction of someone cracking jokes on the other side of the room) and review and repeat the material.

And then use the classroom time to go through the problems with the help of peers and the teacher. (This isn't my idea! This is what they are doing at the Menlo School in California.)

Wouldn't it be fun to go back to school!?

Well of course you can - for free - just go to iTunes University.... http://www.apple.com/education/mobile-learning/

ENJOY!