What is an example of a 2 and 20 rule in venture capital?

Almost all investment firms have the same charging structure. They charge 2% of the fund base a year as a fee and then take 20% as a bonus when good things happen. A better question is what are the exceptions to 2 and 20? Almost every VC and hedge fund charges 2 and 20. 2% management fees to keep the lights on …

Why do companies use cash to finance acquisitions?

The cynical answer is that they don’t want to return the cash to investors as a dividend or share buyback and they don’t know how to spend it to grow organically. Why not just spend some of the cash sitting on the balance sheet? The financial nerd answer comes down to what they see as their cost of capital. If …

Why do SaaS companies bill annually up front?

I like to teach you to think, so let’s cover what you need to know, to understand the annual thing. Firstly, billings. Good shout. You got the point already There are a few concepts to understand: Bookings Billings Revenue And a few others… as you can see (it’s an example based on assumptions): If you don’t understand the differences, then …

MEMO: Chamath SPAC for SoFi

Tl;dr: Social Capital Hedosophia V, the blank-check company associated with investor Chamath Palihapitiya, announced that it will merge with SoFi, taking the personal financial services company public in the process. $IPOE is merging with @SoFi  to take them public. This is an incredible company in banking and fintech that has the potential for a winner-take-most outcome. Watch @cnbc  now or listen to …