Lean(Venture)Cuisine. The LeanFinance Model naturally follows the Lean Startup model. Click on the pic for a smart Silicon Valley VC chef sharing his recipe.
Lean entrepreneurs have to understand the impact of the LeanCapital model on their financing strategy. It doesn't make any sense to go to Tiffany's on Michigan Avenue for a $250 pair of diamond earrings, their business model isn't built for that. Similarly it doesn't make any sense to go to a $200 million+ fund to raise $1-$2M; that fund has to move approx. $16M ($200M/12 portco's) over each portco over the life of the fund after syndication. Assuming three like-sized funds in the deal, that's $48m in each portco to get to a liquidity event. Assuming the VC's own 70% at sale of business and an ok 4-bagger return, the portco has to sell for $250m. TILT, in most LeanCases.
However, look at it from the POV of a $40M fund. $40M/12portcos = $3.33M/portco over life of portco. Syndicate with 3 like-sized funds for $10M all-in to liquidity event (plus angel capital: $.5 - $1M), that works IF portco is Lean Startup AND is capital efficient/scalable. This is LeanStartup entrepreneur as Goldilocks finding the investor porridge that is 'just right'.
What does this mean; "Sherman, set the wayback machine (millennials won't get this, boomers will) to 1995" when VC funds averaged $50M.' See Dialing Down: Venture Capital Returns to Smaller Funds
LeanStart-up + LeanCapital = LeanVC = needs better/faster ecosystem to source,vet, monitor deals = need for more VenturePartners, more experienced mentors, more assessment/execution online tools. Technology + 'just right'-sized VC.
