Bradley Tusk, co-founder and managing associate at Tusk Enterprise Companions, informed TechCrunch in right now’s episode of Fairness that VC as we all know it’s useless. And it has been for the final 4 years.
“Perhaps there’s some VC that I’ve by no means heard of that’s awash with liquidity the final couple of years, however we haven’t returned $1 in capital to our LPs in 4 years,” Tusk stated.
VC has had a tough couple of years because of higher-interest charges, crashed startup valuations from 2021 highs, and stymied IPO and M&A transactions.
Many traders had been holding their breath for President Donald Trump to rejuvenate the VC panorama with deregulatory measures and pro-business tax reforms. Nevertheless, the uncertainty following Trump’s record-breaking government orders, tariff-fueled commerce wars, and the dismantling of federal companies have tempered the anticipated surge in VC exercise.
Or as Tusk put it, “I simply don’t know many severe economists that suppose a commerce warfare is a good suggestion for anybody’s economic system.”
So Tusk is bowing out of the standard VC mannequin and has determined to not elevate a fourth fund. As an alternative, he’s shifting focus to an “equity-for-services” mannequin, which permits Tusk to just accept fairness in trade for serving to startups navigate regulatory environments, legislative communications, and authorities procurement.
For Tusk, equity-for-services goes again to his roots. In 2010, when he had simply launched his political consulting agency Tusk Methods, what was then a small transportation expertise firm known as Uber enlisted his providers. Uber didn’t have the money to pay him, in order that they provided him fairness. Tusk spent the subsequent few years “working campaigns all around the U.S. to legalize Uber and ride-sharing.”
Creating regulatory frameworks for disruptive applied sciences to avoid wasting startups from dying by politics has been Tusk’s bread and butter for years, an experience he earned by earlier roles as marketing campaign supervisor for Michael Bloomberg’s 2009 mayoral race and Deputy Governor of Illinois.
All of the “actual VC stuff” like fundraising from LPs and “compliance, board seats, portfolio building,” simply began to really feel like a distraction from the type of work he really loves doing.
And it appears like a shortcut to do the work he loves, whereas nonetheless really making more cash than he could make as a basic enterprise investor.
“Once I realized that I might simply as simply get on cap tables and get fairness from startups that I like in return for my experience, the standard mannequin simply didn’t make a whole lot of sense,” Tusk stated.
“I really made more cash once I was in equity-for-services as a result of though there’s much less leverage than there’s on a enterprise verify, you retain 100% of the proceeds,” he stated. “Whereas in conventional enterprise, I’ve bought to return the funding capital to traders. I’ve bought to repay the charges, then I’ve bought to offer them 80 cents on the greenback,” he stated.
Tusk Enterprise Companions will proceed to assist its current portfolio firms till the fund’s life cycle ends in 2031.
