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Distributed VC Firms: The Next Iteration of Venture Capital

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  • Mohib Jafri
  • Andy Wu

Abstract

Using a combination of incentive modeling and empirical meta-analyses, this paper provides a pointed critique at the incentive systems that drive venture capital firms to optimize their practices towards activities that increase General Partner utility yet are disjoint from improving the underlying asset of startup equity. We propose a "distributed venture firm" powered by software automations and governed by a set of functional teams called "Pods" that carry out specific tasks with immediate and long-term payouts given on a deal-by-deal basis. Avenues are provided for further research to validate this model and discover likely paths to implementation.

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  • Mohib Jafri & Andy Wu, 2023. "Distributed VC Firms: The Next Iteration of Venture Capital," Papers 2304.03525, arXiv.org.
    • Handle: RePEc:arx:papers:2304.03525
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    References listed on IDEAS

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    1. Christian Hopp, 2010. "When do venture capitalists collaborate? Evidence on the driving forces of venture capital syndication," Small Business Economics, Springer, vol. 35(4), pages 417-431, November.
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