New Model Fund

A combination of factors, a perfect storm if you will, is inhibiting the ability of sponsors/managers of venture capital funds in their pursuit of the next (or occasionally first) iteration of the fund. Raising capital for venture funds … indeed, for funds of all types, shapes and sizes except, perhaps, for funds specializing in distressed securities … has become extraordinarily difficult. Accordingly, in my view it is time to add the structure and organization of private equity funds to the schedules of makeovers to be implemented in the U.S. corporate finance sector generally.

I am proud of the model put together in the early `60s by Ely Bartlett (with me as the rookie wordsmith) and Breed Abbott, for the first Greylock partnership. However, despite my notorious lack of modesty, no one is that good … meaning that the 45 year survival of that structure in substance (with, of course, tweaks here and there) is an anomaly. A bottom up and top down review of the model is long overdue, particularly in today’s difficult environment. Since I claim authorship, in part, of the original structure, I think I have a certain right to revisit the same and propose what, in effect, is an overhaul.