VC MPs
Forgive the pedestrian question - do Managing Partners at VCs necessarily invest their own capital? I know a lot of these guys tend to be entrepreneurs who have sold their own start ups in the past. Do they invest their own personal cash into the start ups of others or do they tend to connect investors with entrepreneurs?
I'm interested the usual scenario specifically on the East Coast. Any thoughts would be appreciated.
Yes, managing partners do invest their own money into their funds. It is uncommon that they will invest their own money outside their fund as it'll give LP's the impression that the partners are self-serving. Some partners will invest more, some less, some run their funds themselves with solely their money. It's pretty difficult to raise a fund if the managing partners aren't even putting in their own money. Typically I'd say the partners contribute 5-20% of the total fund size.
Adding to what's been said above, not just managing partners but all general partners are required to contribute some capital into each fund. This is done to ensure that incentives between GPs and LPs are aligned.
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