Venture debt offers startups non-dilutive capital while providing lenders high-yield returns based on future equity raises rather than historical cash flow. With structured 4-year loans, interest income as the primary return, and high-yield seniority, it’s a strategic, asymmetric play in the venture ecosystem for lenders.

Venture debt is a flexible, low-dilution funding option for VC-backed startups, typically used alongside equity to extend runway without giving up more ownership. It’s repaid through future equity raises, not cash flow, and works best right after a funding round when momentum is strong and capital needs are high.

TVPI measures a fund’s total value, including unrealized gains, while DPI shows actual cash returned to investors—making DPI the more reliable indicator of true performance. TVPI can signal potential upside, but DPI is the ultimate proof that a fund has delivered real returns to LPs.

In venture, a fund’s “vintage year” marks when it starts investing—and performance varies widely by era. While late ’90s and post-2008 vintages delivered standout returns, recent vintages (2020–2021) face headwinds, highlighting how market timing and disciplined investing shape long-term outcomes.

Carried interest is taxed as long-term capital gains (max 20%) instead of ordinary income (up to 37%), a major tax break for GPs that's repeatedly come under political fire. Despite years of reform attempts, including efforts in 2017 and 2022, the loophole remains—and the debate over its future is far from over.

Carried interest is the share of a fund’s profits GPs earn—typically 20%—but only after LPs are repaid and a minimum return (the hurdle rate) is met. It’s paid through a structured waterfall and varies by fund model, making it a high-reward but performance-dependent incentive for venture fund managers.

In venture capital, returning a fund isn’t enough—LPs expect outsized returns to justify the high risk. Due to high failure rates and dilution, only a massive outlier (100x+) can make the math work, making power-law outcomes essential for top-tier fund performance.

Venture capital thrives in low-rate environments, but rising interest rates and strong public equity returns have made VC less attractive on a risk-adjusted basis. If high rates persist, LPs may shift capital away from VC—unless macro conditions or tech growth swing the pendulum back.

VC teams are structured with distinct roles and incentives—from analysts seeking career growth to GPs driven by fund performance and personal capital at stake. Founders should understand who they’re talking to during fundraising, recognizing that while junior team members are valuable allies, investment decisions ultimately rest with partners.

A well-structured ESOP motivates employees and helps startups attract top talent, but it must be balanced to manage dilution for founders and investors. As your company grows, so should your option pool—aligning team incentives with long-term success is key to building a high-performing startup.

An ESOP is essential for attracting talent and aligning teams in early-stage startups, but its structure can significantly impact founder and investor dilution. Creating the ESOP pre-money protects new investors but dilutes existing shareholders more, so founders must strategically plan size and timing with legal and financial guidance.

Preferred shares give investors downside protection and priority in exits, while common shares are typically reserved for founders and employees. With tools like liquidation preferences and conversion options, preferred shares—especially participating ones—offer investors strong exit upside, making it crucial for founders to understand and negotiate these terms carefully.