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"Jason Lemkin is the Managing Director at\u00A0Storm Ventures, a venture capital firm focusing on early-stage enterprise and IT companies, including\u00A0MobileIron,\u00A0Marketo\u00A0and\u00A0GuideSpark.\r\n\r\n\r\n\r\nFrom the standpoint of a founder, the life of a venture capitalist can seem very, very different. It certainly did to me when I was an entrepreneur. The drive down to Sand Hill Road, the corner offices, the Range Rovers and Teslas in the parking lot. The empty parking lots on Friday afternoons.\r\n\r\nOn the surface, that seems to have absolutely nothing in common with the struggles of the common entrepreneur.\u00A0And it is different, no doubt.\r\n\r\nThe pace is different, in particular. A\u00A0VC\u00A0firm doesn\u2019t go bankrupt if it doesn\u2019t make payroll. VCs\u00A0are paid to say &amp;quot;No&amp;quot; far more often than &amp;quot;Yes.&amp;quot; Your results are judged over years, not months and quarters, and it takes a long time to truly fail.\r\n\r\nBut at the end of the day, I\u2019ve learned that being a partner at a successful early-stage\u00A0VC\u00A0firm is not quite as different from being a founder as you might think. In fact, I\u2019ve learned that being a partner at a $150m Venture Fund (more or less my new job) is quite similar to what it is like being CEO of a start-up with a $250,000 monthly burn rate.\r\n\r\nSpecifically, it feels eerily similar to how I felt when I was CEO at EchoSign when we were at about $4m in revenue.\r\n\r\nHow can a $150\u00A0million fund be anything like a startup with just a few million in revenue? Peel the layers back on this onion and it becomes a little more clear.\r\nThe money isn't really there\r\nFirst, you need to understand that as a\u00A0VC, you don\u2019t get all the money upfront. You invest it, in dribbles, over a decade, as you make investments. That $150\u00A0million doesn\u2019t just sit in your bank account on Day 1 of your venture fund.\r\n\r\nSecond, to pay salaries and expenses, venture funds typically charge a\u00A02 percent management fee. That means the\u00A0VC\u2019s own investors (the &amp;quot;Limited Partners&amp;quot; or LPs) pay them $3 million a year to manage a $150\u00A0million fund, an expense that is debited from any profit sharing down the road on the investments.\r\n\r\nNow that $3 million sounds like a lot, but you still have to run the firm. \u00A0You might have three to five partners, three to four associates and principals, and some support staff, plus an office to pay for that has to be somewhat presentable. Don't forget to factor in lots of unreimbursed expenses \u2014 conferences, airplane tickets, and the like.\r\n\r\nAll of a sudden, that\u2019s a significant amount of expense to cover with $250,000 a month. Ten senior professionals, taxes, offices, trade shows\u2026 it\u2019s not that different in fact, from a reasonably well-funded start-up trying to raise a Series B round, with a $250,000 a month burn rate.\r\n\r\nIn fact, personally, I make less money now as a\u00A0VC\u00A0than I did as a Vice President at Adobe after they acquired EchoSign, my last start-up as a founder/CEO.\r\n\r\nSo having a $150\u00A0million venture fund is a nice place to be, indeed, in the grand scheme of things. But it's not exactly resource rich - very late Series A or early Series B-esque, in fact.\r\nWaiting game\r\nThird, even if you do well, it takes seven to ten years to make any real money - and that's the case with many startups out there.\r\n\r\nStorm Ventures' 2005 vintage fund is on a tear, and should return perhaps 400 percent to its investors. This puts it in the top five to ten percent of\u00A0VC\u00A0funds, with $2 billion dollar+ unicorns in the portfolio and a number of other strong exits, with more on the way.\r\n\r\nBut as an early-stage fund, it takes a lot of time for companies to mature. In fact, it\u2019s only in 2014 - a good nine years later - that the fund has returned more than 100 percent of the cash invested. Until then, there are no profits to the\u00A0VC\u00A0partners.\r\n\r\nAnd you have to pay back all those expenses we talked about above first.\r\n\r\nThat means no liquidity for nine+ years, even in a very successful $150\u00A0million venture fund! That\u2019s about as long as getting your start-up to IPO - and maybe a lot longer.\r\nYou and me? We're not so different\r\nSo don\u2019t get me wrong, being a\u00A0VC\u00A0isn\u2019t the roughest job on the planet from a quality-of-life perspective.\r\n\r\nBut compared to be a successful founder-CEO, it feels a lot like having just gotten my Series B round done. A fun time, indeed, but with another seven to ten years of hard work left to IPO before there\u2019s any economic reward.\r\n\r\nWho knew?"^^<http://www.w3.org/2001/XMLSchema#string>
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