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A Summary of

VC's War for Talent

by
Mario Gabriele
The Generalist
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The “War for Talent,” a term first coined by McKinsey in 1997, is gripping tech’s capital allocators, creating a superabundance of options for early builders. Whereas a founder might once have hoped for a spot in “Cambridge Seed,” the precursor to YC, budding CEOs can now choose between an incubator, accelerator, Entrepreneur-in-Residence (EIR) role, or venture studio gig.

Incentives

  • For smaller funds, an EIR program offers a chance to “buy” into a deal they might not see or win otherwise. In exchange for taking on added risk — nothing may come of such an engagement — a smaller player seals their spot at the table.
  • For larger funds, these programs often look like an options strategy. For billion-dollar vehicles, deploying $250K is useful only in that it may smooth the road for a $5M, $10M, $50M investment later on.

Models

  1. Launchpads
  2. Accelerators
  3. Residencies
  4. Studios
  5. Broadly speaking, launchpads and studios are on opposite ends of the spectrum.
  6. The former tends to be less structured and better-suited for early ideation, while the latter leans towards the more formal and often either expects or prescribes a business idea.

Trade-offs

  • The structures mentioned above provide different benefits and drawbacks, suited to differing styles of builder.
  • While some may wish to work on an idea that is uniquely their own, others may prefer to be set loose on a de-risked, pre-vetted notion.
  • Though ownership may be the highest priority to one CEO, another may be glad to give up a percentage in exchange for more guidance and support.
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