If we're talking about ways to build a more equitable and open venture capital industry, we have to talk about transparency. Traditionally, venture capital and transparency are like water and oil; they don't mix. People often describe venture capital as a black box industry; inputs go in, we're not sure about the process, and there's a binary output (invest, don't invest). As a result, people don't have the feedback or experience to improve.
Venture capital, as an industry, deals in information asymmetry. Most funds have internal metrics on private company performance, comparables, and other information that helps them make decisions on investment activity. There's oftentimes a process that investment teams go through before they make decisions. Most teams have benchmarks they are looking for. Aside from very few firms, who are publishing their process? Who is publishing its benchmarks?
In the times we're in, we believe the venture capital space has to get more serious about being transparent. Transparency allows stakeholders to keep everyone accountable so we can improve as an industry. It also allows teams to be more rigorous on execution. You can't cheat or cut corners in a public system.
In the spirit of transparency, we've researched some of the best practices from around the globe and we'll be working to implement some initiatives over the next couple of months. We're focusing on being more deliberate about sharing as much as we can with stakeholders like:
- Founders looking to engage and partner with us
- Investors willing to co-invest / invest in us
- Corporations looking to partner.
For now, we've put together an open-source manual about how tiphub operates. We saw that Bloomberg capital open-sourced their operations manual so founders, employees, and investors were all on the same page about how they operated. We've taken their same structure and will be iterating on this to tailor it to tiphub's operating reality. Here's a link to the initial draft here.
In the coming weeks, we'll move this document along with some others to Github to make sure changes and revisions are tracked and open to others to see. If there's anything you can think about, please let us know.