20VC: Why Traditional VC is Broken: How VCs Learned Nothing from 2021 | Why LPs are More Important than Founders & Advice to Emerging Managers | Bull Case for Bytedance & Why TikTok's Ban Doesn't Matter with Mitchell Green, Lead Edge Capital | The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch | Podwise
20VC: Why Traditional VC is Broken: How VCs Learned Nothing from 2021 | Why LPs are More Important than Founders & Advice to Emerging Managers | Bull Case for Bytedance & Why TikTok's Ban Doesn't Matter with Mitchell Green, Lead Edge Capital
This episode explores the evolving landscape of venture capital investing, particularly within the context of the rapidly expanding AI sector and the challenges faced by both venture capitalists and their Limited Partners (LPs). Against the backdrop of concerns about overvalued companies and unsustainable growth models in the SaaS industry, Mitchell Green, co-founder of Lead Edge Capital, advocates for a more disciplined approach. More significantly, he emphasizes the importance of rigorous criteria selection, focusing on factors like revenue, growth rate, and gross margins, and highlights the crucial role of a disposition committee in facilitating timely exits. For instance, Green details Lead Edge's successful investment in Gravity, a budget planning software company, illustrating their strategy of targeting less glamorous, yet profitable, businesses. As the discussion pivoted to the challenges of the current market, Green argues that the long duration of venture capital investments and the increasing number of funds create a competitive environment where performance and LP relationships are paramount. This means for the venture capital industry that a focus on generating returns for LPs through strategic exits, secondary sales, and open communication is essential for long-term success, even if it means missing out on some of the biggest home-run opportunities.
