Sieving: how Grove achieves 99th percentile VC returns

Sieving: how Grove achieves 99th percentile VC returns

Sieving: how Grove achieves 99th percentile VC returns

We’re engineered to mimic the returns of a VC fund with a 70% hit rate. And, given top funds have a ~20% hit rate, it’s going to mean great things for founders who build their visions

We’re engineered to mimic the returns of a VC fund with a 70% hit rate. And, given top funds have a ~20% hit rate, it’s going to mean great things for founders who build their visions

We’re engineered to mimic the returns of a VC fund with a 70% hit rate. And, given top funds have a ~20% hit rate, it’s going to mean great things for founders who build their visions

Protecting against adverse selection

How we exit failed founders

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Failing

When a founder call it quits, or is deemed by us to no longer be able to reach a venture-scale outcome, they’re entered into the exit queue.

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The Exit Queue 

Once in the queue, failed founders remain full members in Grove for however long it takes for 30% of the network to fail after them. This gives them time, around 18 months, where they continue to receive quarterly cash flow and are encouraged to get back on the saddle, assemble a new founding team, raise funds, and re-join Grove with a new venture. The aim is to give failed founders time to keep building something new while they’re exiting Grove and benefit from the community so they can move on to their next business without needing a corporate salary. 

The math

What this means for network economics

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Controls against adverse selection

It’s important that Grove captures the next Bill Gates or Elon Musk, and that means having a mechanism in place to exit those founders who we know aren’t – or at least, aren’t with their current venture! 

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Cycles your contribution to winners 

Capping the number of failed founders at 30% is accretive to all other founders in the network. When a failed founder leaves, they no longer own their share of the network, and therefore everyone who remains owns more of it. This is how we generate returns equivalent to a VC fund with a 70% hit rate. Because, by design, Sieving literally “cycles” capital away from losers & toward winners.

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It’s a numbers game 

The Grove Network is designed to be disproportionally rewarding to those founders who build more, for longer. The Sieving mechanism ensures quality stays with quality, that the network is protected against adverse selection, and that the Network will never have a freeloader problem.

The bottom line

Grove is engineered to have the economics of a Venture Capital fund with a 70% hit rate. Members who fail will eventually be exited from the network, but receive cash flow & benefit from the financially aligned community while they were building. For members in the network, we expect them generate earn roughly $70,000 per year. See our whitepaper for a look under the hood & into our model.

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© 2024 Grove Network. All rights reserved.

End founder suffering

Subscribe to Grove Newsletter

© 2024 Grove Network. All rights reserved.

End founder suffering

Subscribe to Grove Newsletter

© 2024 Grove Network. All rights reserved.