Peter Thiel wrote 76% of his first fund with his own money

Why skin in the game increases your taste making

Author

Michael Morgenstern
June 17, 2025

Happy Tuesday Brex Community,

Most venture capital runs on other people's money, and it shows. There's a debate to be had about whether this matters. The structure rewards playing it safe by spreading risk across many bets, externalizing downside to LPs, and collecting fees regardless of outcomes. This creates portfolios assembled by committee: scattered, imitative, avoiding the edge cases that generate outsized returns. Meanwhile, founders mortgage homes and sacrifice years on ideas that seem impossible, with real skin in the game because building something legendary requires everything.

Some funds break this mold. When you commit your own capital, everything changes. Due diligence sharpens, conviction deepens, and backing contrarian ideas becomes real rather than rhetorical. Emerging VC managers often have the most skin in the game, betting their careers on concentrated portfolios and fighting for every deal. Smart founders should hunt for conviction signals: What percentage comes from the GP's personal capital? How concentrated is their portfolio? The best investors aren't necessarily those with the biggest funds but the ones whose personal success bleeds with yours. Feedback is always appreciated, let me know if you agree or disagree!

Growing together, Michael Morgenstern 

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