"11 Things I’ve learned from running a micro VC in the last year" - How Discord is Changing the Landscape of Social Networking

"11 Things I’ve learned from running a micro VC in the last year" - How Discord is Changing the Landscape of Social Networking

Running a micro VC fund is no easy task. In fact, most VC funds are failures, just like startups. It's essential to do your homework before deciding to start your own fund. Talk to at least 10 micro VCs to gain insights and understand the challenges and rewards of this business. Moreover, it's crucial to be in a solid financial situation because this venture can be detrimental to your personal life. Even if you have a $10m fund, most of that money needs to be used for investing, not for your livelihood or other expenses.

Bootstrapping a micro VC can be extremely challenging. On one hand, you receive minimal to no salary, and on the other hand, you are mostly prohibited from making money outside of your work. It's a financial sacrifice that requires dedication and a passion for the industry. Many fund managers also invest a portion of their own capital into the fund, typically 1-5% of the fund size. Capital calls are often spread out over three years, allowing for strategic investment decisions.

The "gold standard" for profitable VCs is achieving a "3x return" benchmark. If you surpass this benchmark, you are considered excellent in the industry. However, it's important to note that the risks involved in running a micro VC are high, much like a startup. But the potential upside can be equivalent to working a steady job at a renowned company like Google for ten years. It's a risk-reward balance that requires careful consideration.

One of the challenges in the VC world is the time it takes to raise a fund. On average, it takes a microfund manager approximately two years to raise a fund, which can be a lengthy and arduous process. Additionally, the SEC rules limit the number of accredited investors you can accept into your fund to 99. This means you cannot accept small amounts of money from friends and acquaintances to gain momentum. The fundraising landscape is not always a meritocracy, and it's important to navigate the industry with speed and execution rather than appearances or eloquence.

While micro VCs face their own unique challenges, the social networking landscape is also evolving rapidly. Discord, along with other platforms like Houseparty, Squad, Twitch, and more, is changing the way we connect online. Discord offers a unique experience with features like instantly knowing who is online and voice rooms that resemble permanent chat rooms. It eliminates the need for traditional phone calls and enables seamless communication within a designated room.

As we enter the next decade of social networking, the focus will be on expanding social graphs and venturing beyond existing groups. Traditional social media platforms can often become restrictive and stifling, making it challenging to express oneself authentically. Discord provides an alternative by offering a space designed for conversations rather than performances. It eliminates endless scrolling, news feeds, and the pursuit of likes. The promise of social media was to connect people, but many existing platforms have failed to deliver on this promise. Discord aims to redefine social media by creating spaces that feel more like a house party, where interactions are genuine and natural.

Lowering the barriers to communication is essential in fostering meaningful connections. Discord achieves this by providing various ways to initiate conversations. From leveraging existing content like Instagram Stories, Zenly's location sharing, or FRYDAYS' calendar events to anonymous platforms like question boxes or Nyago, Discord encourages open and diverse communication. By offering a platform reminiscent of the early days of platforms like Mixi and Mobage, Discord aims to create communities where people can join without the pressure of one-on-one interactions.

Discord's impact goes beyond casual chat. Influencers and content creators have been utilizing Discord to connect with their fans, creating dedicated communities that go beyond gaming. Discord provides a space where fans and influencers can interact on a deeper level, fostering a sense of belonging and camaraderie. This trend of creating spaces where people can engage in various activities together, from opening different apps to exploring different content, is shaping the future of social networking.

In conclusion, running a micro VC fund is a challenging endeavor that requires careful planning, financial stability, and a passion for the industry. Discord, along with other emerging platforms, is reshaping the social networking landscape by offering spaces that prioritize genuine conversations over performances. To make the most of this evolving landscape, here are three actionable pieces of advice:

1. Conduct thorough research and seek insights from experienced micro VCs before starting your own fund. Understand the risks, rewards, and financial implications involved.

2. Embrace platforms like Discord that encourage genuine conversations and provide alternative ways to initiate interactions. Explore the power of anonymous communication to create inclusive spaces.

3. Stay updated with the latest trends in social networking and adapt your strategies accordingly. Leverage platforms like Discord to foster deeper connections with your target audience and explore new avenues for growth.

By combining the lessons learned from running a micro VC fund with the transformative power of Discord and other emerging platforms, you can navigate the ever-changing landscape of social networking and unlock new opportunities for success.