Micro VC Economics
Someone I know has launched a small VC fund, they're on their second fund now and looking at EDGAR have raised ~8MM in aggregate. I read the article on "This Is Going To Be Big" about small VC economics. But honestly I still don't get how someone can make a decent living.
Even assuming a 2.5%/20% structure that's only 200k in management fees. After expenses at most they're taking home 100k, especially given it's over 2 funds. I find the whole idea fascinating, but don't see a way for it to be lucrative unless you raise a number of funds.
It looks like the barrier to entry is substantially less than traditional VC especially if you're acting more like an angel. Is the traditional entry point to be an individual angel for a few years then transition to founding a firm and launching an initial fund and then trying to repeat on a regular cadence until you're a few years in and start to have exits?