How about a Fantasy VC Team?

Fall is officially here and for many diehard fans we’re happy to be in the midst of football season once again. For me, it means rooting for the Steelers and trying to get the weekly picks in on time. But for 27 million others, it means fantasy football. I have never quite understood the fantasy football thing since I’ve never created a team myself, but I absolutely love the premise: You can assemble an imaginary team of players and then score points based on their actual performance.

Why bring that up? Well, I was meeting with a couple of GPs recently and it dawned on me that it would be fantastic to be able to create a fantasy VC team. Hopefully this idea will stimulate thoughts about who you would pick to be on such a team. I’m sure many of you have some very definitive ideas. Although I’m not going to name names, my colleagues and I have spent some time discussing how we would construct our very own fantasy VC team as we search for the elusive alpha from the venture capital space over this decade.

We set about the process of creating a fantasy VC team by first considering individual track records. A candidate could be considered for the team if he or she had at least a 2.5x return and at least a dozen deals under his or her belt. If you dig around, there actually are a reasonable number of VCs that fit this bill.

Part of the industry-return problem in real life, of course, is that it is very difficult to find any one firm where every team member has a greater than 2.5x track record, i.e. a team full of consistent, point-producing running backs. Moreover, while an individual may produce a game-changing exit, just like a wide receiver sometimes does, in the context of a fund these wins may not offset the other portfolio losses. But, if you drafted the right fantasy VC team, you could actually build high-returning portfolios.

Ultimately, to build a team, individuals must be drafted to fill various positions. First, we need a quarterback—someone with a strong investment track record who can focus on firm management and will call the plays and facilitate the offense. This person must have the respect and commitment of the other investment partners and communicate effectively with the investor base.

While the quarterback is of central importance, we now need to fill positions in order to complete the team. As historical returns show, one star investor cannot necessarily deliver a winning portfolio. The firm needs the depth of talent (think running back, wide receiver and tight end) who can add distinctive value and realize returns on their investments. These individuals are usually the ones with significant sector expertise and extensive networks. They also are quite often visionaries, with tremendous business acumen and the ability to foresee market trends. These individuals constitute the offense.

The quarterback, wide receivers and tight ends will need assistance with blocking and tackling to drive to the goal line, so we need to pick a strong defense. Here the football analogy also carries well into the venture world. It is the VC’s job, particularly in early stage investing, to work side-by-side with entrepreneurs in building profitable companies, and there is a lot of blocking and tackling that takes place every day to make that happen.

This is where the value of the depth of talent at the firm really comes into play. Just as a football team recruits players with specific skills on the field, our fantasy VC team requires talented investment professionals who can score touchdowns and work closely with entrepreneurs to build shareholder value. While the public markets may sideline our exits from time to time, our fantasy VC team should earn enough points to make it well into the “top quartile” and on to the Super Bowl.

Who would you name to your fantasy VC team? Weigh in below.

Lisa Edgar is a managing director of Paul Capital Investments, a venture capital fund-of-funds manager based in San Francisco. Reach her at ledgar@paulcap.com.

12 Comments

  • Fantasy VC team? At least with sports, all the statistics are available, you are able to judge on results, it’s open and objective.

    Without VCs making their “statistics” fully available, what’s the point? It’s closed and subjective.

  • Josh Kopelman would have to be the 3rd down back… the fast, scrambling little guy who is versatile (3 time entrepreneur before becoming a seed investor) and can also catch passes out of the backfield. He’s the Dave Megget of the VC fantasy team.

  • Great idea Lisa, but I was going to make the same point as Tom — venture firms are not nearly forthcoming enough about their investment and performance data to make “Fantasy VC” practical. Or do you have another idea for how to “score” the individual partners? Even the Forbes Midas List is based as much on subjective judgments as on statistics — e.g. John Doerr was at the top of the list in 2009 despite having no exits in 2008.

  • One of the most useless and nonsensical posts ever written on this site

  • Do any successful VC firms have different positions? A few have “Research Directors” and “Chief Administration Officer,” but by and large we expect each member of the GP to source, close, monitor, and manage all investments. Specialization hasn’t been tested; this is where the fantasy football analogy fails for me. Interesting idea though.

  • We have a similar article on the news tab of our website featuring an investment in the fiber space using a fantasy football analogy.

    http://www.ridgemontep.com/news

  • I bet none of the GPs with a dozen deals under their belt and 2.5x realized returns are under the age of 50. Does anyone who has become a GP after 1999 have what it takes to make Lisa’s fasntasy team?

    Brad Feld, Fred Wilson, and Josh K should be on the team, but I’m not sure even they would make the cut if you are looking for 2.5x on *realized* exits over at least 12 exits

    My team would start with Khsola, Doerr, Moritz, Byers, Leone.

  • Neal Dempsey and Atul Kapadia?

  • “The quarterback, wide receivers and tight ends will need assistance with blocking and tackling to drive to the goal line, so we need to pick a strong defense.”
    — does anyone else have a problem with this statement? I expect more from a Steelers fan! —

    My take: it depends on the field and the game. There is no substitute for passion and deep expertise when building a great company with management. The game isn’t just web and software anymore. Warren (Dan) Bogard

  • My top four votes based on working experience with VC portfolio companies and their feedback.

    Rich Wong, Accel.

    Tim Chang, Norwest.

    Peter Relan, Youweb.

    Ram Sriram, Sherpalo Ventures.

  • What a wonderful piece of text! I have no clue how you were able to say this post..it’d take me long hours. Well worth it though, I’d suspect. Have you considered selling banners on your blog?

  • Who is this idiot, Lisa Edgar? Stupid idea. These fund of fund employees have so much time at their hands to create such drivel. Go back to doing IT, Lisa.

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