Productizing Venture

GP partnerships are highly time and attention constrained, making them the opposite of scalable. Most processes are run manually, and there is rarely much use of software or automation to help source, assess, or execute deals.

Productizing venture means taking everything that venture capitalists do — from sourcing companies to evaluating companies to adding value to founders — and using software or networks to do it better.

Areas of opportunity; hiring, creating products for founders like NFX's Signal, and processes such as indexing people instead of companies.

First, most venture capital firms use antiquated business models that prevent them from being able to move quickly, reach scale, and establish strong competitive moats. Most venture firms are built on a partnership model, like law firms.

A third big issue in the venture industry is that most modern venture firms have broken incentive structures that misalign outcomes between GPs and LPs.

The second structural problem with the VC industry is that most venture firms are selling a product that is fundamentally an undifferentiated commodity — capital.

VCs don’t practice what they preach with respect to their own businesses.