Hey there,

Alberto here. This Wednesday, we're tackling the question I'm asked most often: "How do VCs actually make money?"

Understanding this changes everything about how you invest in private markets.

Read time: 3 min 23 sec 🕒

Here's how a typical venture fund works.

A VC raises $100 million from limited partners (LPs)—wealthy individuals, family offices, institutions. They promise to invest that money over 10 years.

The firm charges a 2% management fee annually to keep the lights on. That's $2 million per year to run operations, pay salaries, do deals.

Then comes the interesting part: carry. If the fund makes money, the VC takes 20% of the profits. The remaining 80% goes back to the LPs.

So if that $100 million fund turns into $400 million, the VC firm keeps $60 million (20% of the $300 million gain). Not bad for 10 years of work.

Here's what nobody tells you about venture capital. Most investments lose money.

Out of 20 startup investments, a typical VC fund sees:

That one winner pays for everything else and makes the fund profitable.

Sequoia put $600K into WhatsApp. Facebook bought it for $19 billion. Sequoia's cut? $3 billion from one investment.

Andreessen Horowitz invested $250K in Instagram. Eighteen months later, Facebook paid $1 billion for the company. A16Z made $78 million.

One deal.

The entire fund returned.

You don't need $100 million to use this strategy.

The same power law works at every level. Whether you're investing $1,000 or $100,000, the math is the same: a few winners carry the entire portfolio.

Here's how to apply it:

Diversify across 10-15 deals minimum. One investment is gambling. Ten investments is a strategy. Don't put everything into one "sure thing."

Focus on teams over ideas. The best product means nothing without a team that can execute. Look for founders who've built something before.

Think in years, not months. Private investments take 5-7 years on average to exit. Sometimes longer. If you need the money in two years, don't invest it.

Use platforms that give you access. What used to require connections and wealth minimums is now available through platforms designed for individual investors.

Twenty years ago, venture investing was locked behind closed doors. You needed connections, wealth, and insider access.

Today? The barriers are gone.

Platforms like Founderscrowd give you the same access VCs have had for decades. Vetted deals. Real companies. Direct investment opportunities.

The future of wealth isn't being built in public markets. It's being built in private companies before they go public, and you can now participate.

This is where learning becomes doing.

VIP members get:

You learn how VCs invest. Then you invest alongside them.

Thursday: First investment opportunity exclusively for VIP members — A fintech company using AI to automate compliance for financial institutions. Real traction, real revenue, incredible timing.

Saturday: Your complete guide to making your first angel investment — Step-by-step walkthrough from choosing deals to wiring funds.