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OnStartups.com

The success of each fund entirely rests on the top one to three companies in the fund. There’s often even a large gap between the returns from the No. 1 company and those from the runner-up. Fred Wilson, co-founder of Union Square Ventures, uses a heuristic of thirds: “one deal returns the fund, another 3 to 4 deals return it again, and the rest re

Having seen this example, Palantir partnered with a secondary fund to offer liquidity to its employees so that they would never trip the five-hundred-plus owner barrier.

Allocating a predetermined amount of capital is essential to creating the sense of urgency that drives startups.