Deep Tech Catalyst

From Startups to LPs: Understanding the Venture Capital Value Chain in Deep Tech. A chat with Tülin Tokatli, CEO @ Pitch Me First - Former LP at EIF


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Host: Nicola Marchese

Guest: Tülin Tokatli

#DeepTechCatalyst


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KEY TAKEAWAYS:


1. Capital flows from the largest investors at the top, such as Limited Partners (LPs) or mandators, through public investors like fund-of-funds, down to venture capital and private equity funds, and finally to startups. This structure underscores the dependency of each level on the previous for funding.


2. The entire venture capital process is driven by the need to create value for investors at each level. Successful startups not only return their investments but may become investors themselves, creating a cyclical investment pattern within the ecosystem.


3. LPs have varied investment objectives. Institutional investors may focus on policy-driven investments, like technology transfer from universities, which are essential for breakthrough innovations in Deep Tech. Meanwhile, smaller investors like family offices and angel investors have more flexibility in setting their investment preferences.


4. Effective operation of a VC fund involves aligning and incentivizing all parties involved, ensuring that both LPs and fund managers are invested in the long-term success of the fund. Proper governance and regular interaction with investors are crucial to maintaining trust and ensuring continued investment.


5. Key terms such as 'management fee' and 'carried interest' are fundamental to understanding how VC funds operate. The management fee covers operational costs, allowing fund managers to focus on investment management without financial distraction, while carried interest provides a share of the profits, incentivizing fund managers to generate high returns.

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Disclaimer: This content is provided solely for educational and informational purposes and should not be interpreted as financial or legal advice. Given the complexity and potential impact of these terms, it is crucial to consult with an attorney. Legal expertise is invaluable in navigating these technical aspects and ensuring that the terms are in your best interests before finalizing any agreements.

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Deep Tech CatalystBy The Scenarionist