What LPs Really Want in Venture Capital

Strategy

April 22, 2025

Chris Rizik breaks down venture metrics, liquidity issues, and co-investment pitfalls.

Topics discussed in the episode:

How is AI changing startup talent dynamics?

Why is exit readiness important from day one?

How can startups connect with large corporate customers?

Can startups succeed without becoming unicorns?

How will AI impact startup building and exits?

How is AI changing startup talent dynamics?

AI is breaking the talent monopoly of Silicon Valley, impacting hiring and team building, allowing startups to build teams anywhere.

\"AI is really breaking that monopoly. And whether it's the Midwest or just much, much more broadly speaking, the facts suggest that company building is going to be able to be done anywhere and not have to go through Silicon Valley, um, on the talent side.\"

Founders can access talent globally due to AI advancements.
Reduced dependence on tech hubs allows for distributed teams.
Leverage AI tools to build efficient teams anywhere.

Why is exit readiness important from day one?

Focusing on exit readiness from the start can impact your fundraising and product-market fit strategies, ensuring alignment with market demands.

\"One of them is exit readiness, and it goes to all the elements of exit readiness. Who's talking to the PE firms that are the natural buyers? Who's talking to the strategists? All these things we need, how is our data room?\"

Founders should plan for exit strategies early to align growth with market expectations.
Regularly assess exit readiness to identify gaps.
Engaging with potential acquirers early can inform product development.

How can startups connect with large corporate customers?

Connecting with large corporations can accelerate distribution and growth, impacting distribution and marketing strategies for founders.

\"We've tracked a little over 100 contracts or pilots that have happened so far between our corporate investors and companies in the portfolio.\"

Founders can leverage investor networks to access corporate customers.
Partnering with funds that facilitate such connections can enhance growth.
Building relationships with corporates may lead to significant sales opportunities.

Can startups succeed without becoming unicorns?

Capital-efficient startups can achieve significant success and exits without needing to become unicorns, affecting fundraising and exit strategies.

\"Some of the best exits are those. The idea, particularly here in the Midwest, there's a lot of really good opportunities to get great returns on investment in the $100 to $300 million range.\"

Founders can focus on capital efficiency and higher ownership stakes to reach meaningful exits.
Successful exits don't require unicorn valuations and can be achieved faster.
Tailoring strategy towards achievable goals can lead to strong returns.

How will AI impact startup building and exits?

The rise of AI is transforming startup building, enabling more efficient product development and impacting how founders approach fundraising and exits.

\"We're gonna be able to do vertical IT companies using AI tools that are gonna be able to be formed with less people, faster, less money.\"

Founders can leverage AI to build products faster and more cost-effectively.
Smaller, capital-efficient startups can reach successful exits without needing to become unicorns.
Embracing AI may reduce the need for large fundraising rounds.