In this Part II of a two-part series, we identify systemic problems with the current institutions that fund venture capital (VC) groups and propose how to change this archaic system. They deploy capital as limited partners (LPs) to venture capital funds’ general partners (GPs) to invest in early stage, high growth companies to earn an investment return. According to PitchBook data, last year institutional investors accounted for 75% of all U.S. VC deal flow versus family offices. Because institutional investors are fiduciaries of other parties’ money they, understandably, have strict policies around how they choose fund GPs. This means they don’t even consider smaller funds (e.g., less than $100M), and most first-time funds are smaller.

Source: Forbes November 21, 2017 20:15 UTC