Bradley Tusk says he makes more money with ‘equity-for-services’ than he did as a traditional VC

Bradley Tusk, co-founder and managing accomplice at Tusk Enterprise Companions, instructed TechCrunch in today’s episode of Equity that VC as we all know it’s lifeless. 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 increased rates of interest, 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 govt orders, tariff-fueled commerce wars, and the dismantling of federal agencies has tempered the anticipated surge in VC exercise. 

Or as Tusk put it, “I simply don’t know many severe economists that assume a commerce battle is a good suggestion for anybody’s financial system.”

So Tusk is bowing out of the standard VC mannequin and has determined to not elevate a fourth fund. As a substitute, he’s shifting focus to an “equity-for-services” mannequin, which permits Tusk to simply accept fairness in alternate 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 know-how firm referred to as Uber enlisted his companies. Uber didn’t have the money to pay him, in order that they supplied him fairness. Tusk spent the following few years “operating campaigns everywhere in the U.S. to legalize Uber and ride-sharing.”

Creating regulatory frameworks for disruptive applied sciences to save lots of startups from dying by politics has been Tusk’s bread and butter for years, an experience he earned via 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 development,” simply began to really feel like a distraction from the type of work he truly loves doing.

And it seems like a shortcut to do the work he loves, whereas nonetheless truly making extra money than he could make as a traditional enterprise investor. 

“After I realized that I may 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 truly made extra money once I was in equity-for-services as a result of though there’s much less leverage than there’s on a enterprise test, 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 provide them 80 cents on the greenback,” he stated.

Tusk Enterprise Companions will proceed to help its present portfolio corporations till the fund’s life cycle ends in 2031.