Microfunds as a way to gain early insight into promising startups | Hacker News Reader

Microfunds as a way to gain early insight into promising startups

theinformation.com

77 pointschat20 comments

The micro funds as listed in this article seem more like a replacement for angel rounds or almost as scouting fees to bring deals into traditional VC funding structures.

That (to me) is less interesting than the work that's happening with TinySeed, Earnest Capital, etc. where they're trying to hit bootstrapped companies with a little bit of traction but that are unlikely to become unicorns.

100% agreed - would add indie.vc to this list.

Anyone know what the management fees are on a microfund?

We (three friends) started a micro-VC fund in 2014, called Mission and Market [0].

We decided to go for 0% management fee, 20% carry up to 2x, and then 30% from there up.

[0]: http://m14t.com/

another data point:

0% management fee

20% carry

https://magic.do

No info on the webpage. No (or very few) posts on Github, Twitter, Instagram. What is it about?

Most common is 2% management fee and 20% carry

What do you mean by carry? They get 20% of the profits?

https://en.wikipedia.org/wiki/Carried_interest

So in movies like the big short when they day they have a negative carry on assuming that means they're paying instead of being paid?

> In 2019, Guo sent a cold email to Chris Dixon, a general partner at the firm, asking again for capital, this time for a tiny VC fund she was raising alongside tech entrepreneur Dave Fontenot.

hilarious way to start the article. fontenot is a perpetual idea guy, sv brogrammer-turned-mindfulness-and-meditation non-operator. guo afaik was effectively kicked out of scale relatively early on and has been riding the coattails and traveling since then. marc isnt getting any credibility from this opening, which incidentally backend cap surely helped put together as a content marketing piece

interesting commentary on the trend of dealflow, though. with so much capital floating around, VC differentiation is increasingly important. "thought leadership" a la naval is one way to obtain it; earlier and better dealflow via scouts (or scout microfunds) is another.

I worked at Scale during their first six months (as a contractor).

The parent’s comment is a carefully framed exaggeration. Lucy raised their Series A, hired the first engineers, designers, marketer, and left Scale around their Series B – well after the company was on an exceptional trajectory.

Clearly a puff piece but just want to second the above, I was in their peer group for a time. Pretty sure Guo also got canned by Snap before Scale? Looks like Dave is still riding wave from being the collegiate hackathon pied piper. Astounded these two raised $7mm, did anyone do any due diligence?

> Pretty sure Guo also got canned by Snap before Scale?

This is false.

She quit Snapchat to start AVA after getting into YC, and they pivoted from AVA to Scale during the YC batch.

Haters gonna hate... It's about getting shit done and these guys can execute. Dave has affected the lives of many and has great respect in the Valley

> Secret Weapon

How secret can it be if an article interviewing insiders reveals it?

This smells of puff piece marketing nonsense.

That's just the usual title thing: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu.... It's their job to puff it up, ours to puncture it.

We've replaced the title with a representative phrase from the article.

Please do not put paywalled links as direct targets.

The Information regularly unlocks articles for HN readers. I asked them to unlock this one and they agreed and sent a special URL, so it should be working for anyone who clicks on the link. Is that not the case?

Paywalled links in general are ok if there's a workaround. Users usually post workarounds in the threads. This is in the FAQ at https://news.ycombinator.com/newsfaq.html and there's more explanation here:

https://news.ycombinator.com/item?id=10178989

https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...

theinformation.com normally has a hard wall, which normally makes the submissions off topic here. But if they unlock it for HN readers, that's welcome!

This fund is unlike any fund out there, and it makes sense as the DNA stems from what birthed a shot heard around all major US universities in the 2010s when Dave Fontenot and his crew at MLH catalyzed thousands of college students to get together and build software all across the nation. Their approach in VC I believe will be just as exciting in this new chapter. Excited to see what comes out of this

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