Innovations in VC that led to my strategy

The reason why I can exist today as a Solo GP is because of two innovations that took place in the last decade.

The first is the creation of AngelList as a fund administrative platform.

As a Solo GP, one of the only reasons that I’m able to manage over 500 LP investors and 150 portfolio companies is because of AngelList’s software, alongside best-in-class service, that provides back-office support including legal, tax, banking, and regulatory compliance.

The second shift is that today, 9 out of 10 early-stage investments are done using a SAFE, which stands for Simple Agreement for Future Equity.

Before this innovation, most rounds were done through cumbersome convertible debt agreements or as full-on priced rounds. This method of fundraising would often take 3-4 months and cost the founder $30K+ in legal fees.

The SAFE allows startups to raise funds quickly without accruing interest or repayment obligations, automatically converting into equity at a future priced round. And the only thing you have to negotiate is the valuation cap and/or discount percentage to the next round.

This means that I can meet a founder and close a deal on the very same day. I can even invest again a week or a month later at a different price, taking into account any value creation in real-time that more fairly protects the entrepreneur.

This is truly a model that couldn't exist in venture capital investing 5-10 years ago. Software made the market more liquid, and legal innovation removed friction from the investing process.

The next frontier? Regulatory reform.

Currently, regulations limit venture funds to only 100 accredited investors.

Investors like McKeever (Mac) Conwell,II are going directly to Congress to advocate increasing this limit from 100 to 500. This kind of regulatory reform would dramatically increase access and allow more people to participate in the asymmetric upside and financial diversification that venture capital provides.

Beyond that, we need to change the accreditation laws themselves. You don't need to be wealthy to invest in the public stock market, but you do need to be rich to invest in venture capital.

These archaic regulations are limiting both who can raise funds and who can invest in them.

We’ve seen a lot of innovation and positive change in this industry over the past 20 years. And there’s still so much to be done.