
Ask HN: How to structure joining a new VC firm - microoooo
Being courted by a micro-VC fund&#x2F;incubator and would love guidance on how to secure proper compensation. This firm has yet to launch, and is interested in me joining as &quot;Chief Brand Officer&quot; as a value-add to portfolio companies in the way of branding, design and marketing. The founders are entrepreneurs themselves. We are talking salary + profit share. Basic. But is there something more specific I should be pushing for? Yesterday at a conference I overheard a guy mandating he take a piece as GP for his situation. I just don&#x27;t have enough experience around VC or investment structures to know what I&#x27;m potentially leaving on the table. Thank you!
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jacquesm
There is a lot of context missing here but some ground rules for a 'regular'
VC would be:

Carry / number of partners would be a nice starting point for the profit share
and 50% of the management fee / number of partners for the base compensation.
Note that the management fee is usually on funds under management, not the
total size of the fund so this will fluctuate as more funds are committed and
will be reduced again when the fund reaches the end of its life.

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microoooo
Thank you. It's a typical 2/20 structure starting out with two partners and
the first fund size is ~$25m

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jacquesm
Ok, so 2% of 25 million works out to an operating budget of 500K per year
which is not a whole lot so you may have to scale that down a bit, travel,
accomodation and due diligence costs for failed bids add up. A larger fund has
an easier time with this. Fortunately the number of partners is small. If you
can raise more money you should probably do so, but $120K for base
compensation would do you nicely to stay afloat while the fund is spending and
50% of the 20% carry of the first exit will compensate you for opportunity
cost, more exits and you should do just fine.

If you manage 2x or more across the whole fund you are going to do quite well,
but that is not as easy as it sounds, especially not if this is your first
foray into venture capitalism, expect to pay a tuition fee during the first
couple of investments.

Best of luck with this!

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microoooo
Really appreciate your replies. The two current GP partners have depth in this
area. Really my big question was whether I should be asking for a piece of the
GP-structure, or does general net profit share suffice? Is one generational
versus the other? Again, thank you.

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jacquesm
If you are going to be visible to the outside world as a GP then you should
definitely go for getting the same deal as they do. If not you will be either
a junior partner or even seen as an associate, which might not be the best
spot to be in, both financially and from the point of view of how much
influence you can exert on deals being done or rather not.

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DoreenMichele
I hesitate to weigh in here because I know essentially nothing about the
space. But I saw your question and I thought of Arlan Hamilton, the founder of
Backstage Capital. I thought I would suggest that articles/information about
her might be of interest to you if you don't get enough information from HN
replies (or wherever else you are looking for info).

[https://twitter.com/ArlanWasHere](https://twitter.com/ArlanWasHere)

[https://backstagecapital.com/](https://backstagecapital.com/)

Best of luck.

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microoooo
Thanks. Just read about her earlier today. Media had a run with her stepping
away from the incubation side.

To clarify: I'm not seeking proprietary guidance, just wanted to make sure
there isn't a common structure I am not aware of!

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microoooo
I found this which is very insightful: [https://jtangovc.com/our-vc-firms-
compensation-structure/](https://jtangovc.com/our-vc-firms-compensation-
structure/)

