Good morning friends! I hope everyone has been doing well. I am working on a new website to house all of my blog posts. So, some more construction going on in the background as I migrate to a new platform.

Fishing in Venture 🎣

This week I want to talk about the importance of branding and how it’s so catalytic for startups and just business in general. I met with a brand consultant this week (shoutout Sarah Aylward from Storyworthy Studios!) In our conversation we dived deep into how I could elevate my personal brand, particularly focusing on the venture capital and the startups space. Leveraging SEO is crucial in today’s age to establish your brand. It’s super easy to pay for a service that creates a cool website but SEO is the modern billboard for getting your brand in front of people. We talked about how authenticity through short form videos and how people gravitate to more authentic content than content that is recycled quickly. But branding isn’t just about having a sweet social media account. It’s about cultivating yourself or your product and bringing that to the public. The most important aspect is building yourself first. Focusing on the strategy and the metrics are important, but the key is to establish what you want to be known for and seen as. What I am not saying is that you have to be all put together before you start “branding” yourself. The goal is to establish goals, create a discipline around those goals, and find your true passions to elevate within your branding. If you know me, you know I am passionate about the power of storytelling. Branding is just storytelling thats in the public square for everyone to engage with!

After meeting with a brand consultant, I would highly recommend finding someone in your network (I highly recommend Sarah!). Even if you don’t want to work on your brand, the consultant helps you understand who you are and how to better communicate. Communication is the intersection of life itself and we all could work on communicating better.

Fish of the Week 🐟

This week I don’t have a fish that I want to fry but if you’d like to be featured I would love to meet with you and share your story! Hit the button below to get started

Ebbs & Flows 🌊

Limited Partners (LPs) & General Partners (GPs)

If you’re around the VC scene then you’ve heard the term LP and GP thrown around. I want to help bring awareness to the jargon and help show the difference between both roles. Let’s start with the definitions:

A Limited Partner (LP) is an investor in a fund that provides capital. LPs can be high net worth individuals, pension funds, family offices, sovereign funds, insurance companies, among others. They can be individuals or corporate entities, but are nonetheless referred to as LPs. LPs have limited liability and are not involved in the day-to-day operations or decision-making of the fund.

A GP, or General Partner, is the actual manager of the fund that is responsible for making investment decisions in a VC firm. They are typically involved in tasks such as sourcing deals, conducting due diligence, and making investment decisions. They also have a stake in the fund's profits, often through a structure known as "carried interest".

Okay so what is the difference? Is there a relationship between the two? By definition they’re different but in practice it varies by VC fund. Think of Limited Partners (LPs) as the backers in the shadows and General Partners (GPs) as the frontmen. LPs are the ones writing the checks, investing their wealth without getting their hands dirty in the administration and vetting of the investment (still not always true). The LPs are crucial because they fuel the fund, but they're not the ones calling the shots on investments—that's the GP's arena. The GPs hustle to make those investment choices, steering the ship and taking responsibility for the fund's triumphs or tribulations. It's a dynamic duo of capital and management. That “carried interest” mentioned above is what incentivizes the GPs to make good investments and generate returns for the LPs. So, what is it?

Carried interest is the percentage of profits that will be paid to the GP of a venture capital fund, calculated after the repayment of invested capital. It's typically a significant portion of the GP's compensation. For example, in a "2 and 20" structure, the "20" refers to a 20% carried interest. This means the GP receives 20% of the fund's profits. The 2 refers to a 2% management fee that is typically charged annually on invested capital. Sounds simple right? Well it can get really sticky. But let’s stick with the basics.

It is crucial for LPs and GPs to have a strong relationship. In order for investing to be successful, the LPs have to trust and give freedom to the GP to manage and make investment decisions in companies that they believe will drive a return. Now it’s also crucial for the GPs to be transparent and diligent with their investments and LPs. The GP is the middleman between the startups receiving cash and the LPs investing the cash. As a GP, it is so so so important to make sure you are a good communicator and can connect with people.

If you think you’d like to start investing in early-stage startups I’d love to help you strategize how you can find a GP that will fit your investing philosophy and one that is trustworthy. If you’re an aspiring GP and want to continue to learn what its like to invest in this asset class then keep following for more or reach out!

Thank you for your support!

Dawson J. Racek