On December 31, 2025, I retired after being involved in the technology investment space for 30 years and 23 years after founding Vintage Investment Partners (LinkedIn).
At my final Vintage annual meeting as Managing Partner, I presented some learnings from my period as a venture investor. I thought it might be helpful to convert that presentation into a series of three blogs. This is the final one of the three.
When I started Vintage, I had a dream of building a successful, long-term sustainable firm that would survive me and continue to grow, provide strong returns and preserve a culture I wanted to create.
Vintage is managing a bit over $4.4 billion today and we have successfully transitioned the leadership of the fund to the next generation of managing partners.
Along the way, I made a bunch of mistakes, but also got a few things right. Here are the five lessons I learned about building a sustainable firm.
Learning #1 – More than Ever, You are Running a Business, Not Just a Fund
Sometimes I feel that if the companies in which we invested managed themselves as badly as we manage our own venture funds they would have shut down long ago. Venture fund managers need to remember that they are managing a business and not just a fund.
What does this mean?
First, the firm should have a Mission Statement that addresses why should LPs invest in them or Founders pick them. Second, the firm should have a Strategy…a Plan; what will the firm look like in team, focus and size, not just today, but three funds in the future. Third, the firm needs to address and define its Culture; “What are the values my firm represents” and how to get everyone committed to those values.
I have been surprised how few firms actually do any of this
Learning #2 – Have a Differentiated Strategy that Defines the Future and Don’t be a Lemming
I wrote about this in the first post of the previous two posts. There is way too much reactive investing. The really great investors have a vision and a theme and are thinking 5 to 10 years ahead about what is going to be big and not just jumping on the bandwagon of what is already hot. If it is already hot, it may be too late to generate venture returns. One sees this just by looking at the gap in returns between the top decile funds and the median funds.
Learning #3 – A Fund Partnership is like a Marriage – It Does Not Work if You Do Not Work on It
I have been lucky to be married for over thirty-five years to the most incredible woman. I have also been lucky to have some of the most incredible partners. I was never successful being partners with people who I did not truly love. Maybe that’s me, but I think that some of the success at Vintage and the culture we created starts with how the partners relate to each other. We argue about deals…(oh…do we argue!). But, we know that each partner is coming from a good place and means the best for the firm. That is why we can argue and at the same time desperately care for each other. A good partnership means open and honest communication, where “me” and “mine” becomes “we” and “ours”. There is enough conflict and politics outside. The last thing you need is gamesmanship in a partnership.
Learning #4 – Treat Your LPs as Customers
As I noted, we are not just managing funds but managing firms. And yes, we have customers. The key one is our LPs. A few thoughts about how to work with your LPs:
- Don’t oversell to your LPs: Every VC I meet pitches me that he/she is Top Quartile. LPs are not stupid and they also know we all make mistakes. Pitch a balanced, differentiated story with learnings from the mistakes.
- Valuations: If you are holding your companies at valuations higher than other GPs, your LPs know it; we have the data and we look at it. Get out of the mindset of “growing into the valuation”. Best honest with yourselves and your LPs on valuations.
- Bad news: Tell your LPs first – especially about senior team changes. There is nothing more damaging than LPs hearing the news from other LPs or worse – from another GP.
- Do what you say to the LP when you raise the money: Don’t change fund size in the middle of the raise or raise a new fund for a new strategy weeks or months after the previous fund.
- Fees: Don’t be greedy on fund extensions fees and terms.
Learning #5 – Either Build the Succession Right or…Wind It Down Gracefully
It takes a long time to build and exit companies. Based on my experience, very few funds end within the typical 10-year lifespan because you usually can’t or you may not want to get out of all your investments by then. So, to be fair to your investors and your employees, as you get older, you need to think about who will manage these exits and the funds going forward. The worst thing that you can do is to have a succession forced on you by LPs; GPs should proactively manage and time succession and not wait for the LPs to ask. As I see it, implementing a succession process should be done over a period of years and not as a last-minute fix. This means gradually devolving management responsibilities to the younger partners at least three years before the Managing Partner’s retirement, building LP and market confidence in the new leaders years before the transition, and building a true economic transition to the younger partners, not just a title transition. And above all, when you leave, you leave – no investment committee, no chairman, no hanging on for dear life.
Final Thoughts
The great founders that I invested in did not create their companies solely to make money. They wanted to change the world. I believe that a founder of a venture company should think the same way. It should not only be about the money; it should be about building a long-term firm that you can be proud of. The late Rabbi Jonthan Sacks, z”l, the Chief Rabbi of the UK, said that “good leaders create followers, great leaders create leaders”. Seeing how my wonderful partners are leading Vintage to places that I could never dream makes me a proud founder.
Disclaimers: 1. This marketing communication is provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein, reflect the subjective judgments and assumptions of the authors only, and do not necessarily reflect the views of [Vintage]. Investment recommendations may be inconsistent with these opinions. There is no assurance that developments will transpire as forecasted and actual results will be different. Data and analysis does not represent the actual, or expected future performance of any investment product. Information, including that obtained from outside sources, is believed to be correct, but we cannot guarantee its accuracy. This information is subject to change at any time without notice. 2. This information is subject to change at any time without notice. 3.Any investment that has the possibility for profits also has the possibility of losses, including the loss of principal. 4. Descriptions assume normal market conditions. Numbers are approximate. 5. Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. 6. Any investment that has the possibility for profits also has the possibility of losses, including the loss of principal.
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