The Rise of the Solo Capitalists(nbt.substack.com)
nbt.substack.com
The Rise of the Solo Capitalists
https://nbt.substack.com/p/the-rise-of-the-solo-capitalists
7 comments
I think the real change is a decline in the prestige of the VC firm, which is often used as a signalling factor, combined with a rise in the profile of the individual. It's still a pretty typical VC fund model, with a celebrity face out front. I find it pretty interesting and a little funny that there appears to be real value in differentiating where the money comes from, essentially: "We fund companies with only the purest, artisanal funds, raised without antibiotics or preservatives before they are lovingly invested in your firm".
I think you nailed it. Most name brand VC firms reputations are based on a couple of good decisions early in their careers. The time scales we're talking about scream hindsight bias, and even in the best case where they made good decisions rather than got lucky, whatever cargo cult training baloney they come up with doesn't mean they will continue to make good decisions as they pass the torch to whatever MBA dipshits they dig up as successors.
https://spearhead.co/ basically converts founders into solo capitalists under their own brand.
Easier than ever in some ways. Your personal network becomes your unique sourcing advantage that firms can’t get dibs on. What do you know, founders tend to trust other founders.
Easier than ever in some ways. Your personal network becomes your unique sourcing advantage that firms can’t get dibs on. What do you know, founders tend to trust other founders.
That is a super interesting model. Any idea who makes up the first three "classes" of investors?
> the ability to make very quick investment decisions (given you are the sole decision maker and don't have to persuade any partners)
This specific advantage also benefits Warren Buffett, except in a different investment arena.
This specific advantage also benefits Warren Buffett, except in a different investment arena.
The trend is towards the follow model from social media. You follow investments from individuals and pay them a success fee on exit. No more AUM fee
Are they really "solo" though? In VC firms the VCs usually put up less than 5% of the money as the GP, and then the LPs (pension funds, high net-worth individuals, endowments, etc.) that are invested in the VC fund put up the rest. I would imagine it is the same with some of these "solo" capitalists.
Looking forward to the new newsletter!
The problem with raising from Solo Capitalists is that some are toxic individuals.
I mean, sure, but the problem with raising from any source is that your counterpart(s) might be toxic. It's not like teams or entire companies are immune from developing toxic habits over time. Do your due diligence up front and you won't have to find out later.
You’re downvoted by the crowd, but you’re 100% correct. The world of solo capitalism is a wonderful place for a bad actor to hide and thrive without having to come to terms with what’s wrong.
We have to come up with better systems for accountability, for both groups and individuals. Solving this problem is a major opportunity, given the growing interest in ethical capitalism and socially responsible investing. Unlike the situation in decades past, money to be made here, so I am assuming people will work on this.
We have to come up with better systems for accountability, for both groups and individuals. Solving this problem is a major opportunity, given the growing interest in ethical capitalism and socially responsible investing. Unlike the situation in decades past, money to be made here, so I am assuming people will work on this.
Toxic individuals will always exist, but you are not forced to do business with them. It's pretty great.
Imperfect information isn’t limited to “solo capitalists”. How absurd.
Humanity is full of grifters who may be known to some but unknown to others.
Trump wasn’t getting loans from American banks so he went to Germany.
To a giant bank everyone knows is shady af. You think that bank couldn’t find out what’s up with Trump?
Society itself doesn’t give a shit about.
Society will do little all about it’s embedded institutional issues. It’s more interested in armchair expertly doing nothing but flogging the memes grandpa rammed down its throat like kowtowed babies.
Humanity is full of grifters who may be known to some but unknown to others.
Trump wasn’t getting loans from American banks so he went to Germany.
To a giant bank everyone knows is shady af. You think that bank couldn’t find out what’s up with Trump?
Society itself doesn’t give a shit about.
Society will do little all about it’s embedded institutional issues. It’s more interested in armchair expertly doing nothing but flogging the memes grandpa rammed down its throat like kowtowed babies.
Seems to be the way things go around here unfortunately.
These individuals aren't just investing their own capital. They’re raising dedicated funds and special purpose vehicles (SPVs) from traditional limited partners (LPs)."
I don't mean to snark, but isn't this just individuals starting new venture capital firms? Maybe it's newsworthy if new VC funds are being raised by former tech founders rather than people with finance backgrounds, but it's a different story.