Venture Parenting:
Your kids are the most
important startups

The most important startup you’ll ever invest in is your child.

Before navigating the daunting and thrilling journey of raising a child in the uncertain world of tomorrow, you of course have to get into #FounderMode. Think of the decision to have a child as the pre-seed stage. This requires careful deliberation and consent among the fund partners. Despite the prevailing mood of pessimism about the future of humanity, as the parents of a half-dozen children, allow us to join the chorus of natalists who strongly advocate having kids as a source of pure joy and a vote of confidence in our collective future. Take the plunge into the seed stage of conception. At the risk of sounding juvenile: Exchange equity and seal the deal.

Good move. Once your child is born, that’s when you start deploying serious capital. How much should you invest at each stage of your child’s startup journey?

Beyond the love and nurturing that all parents should ideally provide their children, thinking of them as startup investments provides a useful metaphor. We argue that parents would be wise to empower their children with entrepreneurial skills from early on as a foundation of their educational journey. The trend is clear: Ambitious youth will gladly forego their allowance – and college – for an investment in their business idea. Why shouldn’t a parent trade cash for equity?

Middle school and high school age kids these days aren’t playing with Monopoly money; they’re buying crypto. Enterprise classes and startup “shark tanks” have flourished across high schools alongside the well-established science competitions. Since 2005, Y Combinator has backed young entrepreneurs of college age and catapulted legendary companies such as AirBnB, Stripe, Dropbox and Reddit. And since 2010, the Thiel Fellowship has targeted youth under the age of 20 to promote their venture ideas, producing numerous unicorns, notably Ethereum and Figma. The most recent teen tech sensation is Zach Yadegari of Long Island, New York, whose Cal AI app generated $30 million in revenue based on estimating the nutritional content of foods from just a photo.

Behind the scenes, parents often write the first cheque for their children’s ventures – though notably, neither Bill Gates nor Mark Zuckerberg took money from their parents when founding Microsoft and Facebook, respectively. The new breed of venture parents are proactive in having skin in the game to support their kids. This isn’t about burnishing their college applications, since it’s not clear that college is where they’re headed. It’s about the family as a nucleus and team preparing for whatever tomorrow holds.

If ninety percent of all the time you’ll ever spend with your children occurs before they turn eighteen, then you’d better make it count. You may not be a professional investor, but you are a startup cofounder and need to devote the emotional, intellectual, spiritual and financial capital to help the startup succeed.

There is a foreboding sense that the pathway from educational credentials to professional success has broken down. In what many are calling the AI “Job-pocalyse,” the unemployment rate for recent college graduates has surpassed the overall unemployment rate. Meanwhile, ubiquitous social media have perversely exacerbated the loneliness epidemic, meaning youth feel neither personally nor professionally fulfilled. Society as a whole is ill-prepared for the disruptions unfolding at breakneck speed: economic safety nets such as basic income are insufficient, and worker retraining and lifelong learning programs are more myth than reality.

Much has been made of the need to return to an apprenticeship model of working side-by-side with professionals in guilds to master a craft. While some countries – notably Germany and Korea – have robust vocational and technical institutes with deep industry linkages, in most countries the transition from school to workplace is jarring. Even this model is at risk from AI and automation.

There has never been a single recipe for success, but at the broadest level, today’s children stand a better chance of thriving in tomorrow’s world if they are intelligent, meaning able to acquire and apply knowledge, and worldly, indicating experience and sophistication in dealing with practical matters.

Cultivating intelligent and worldly children begins at home. Parents have to retake ownership of their children’s educational and professional journey, viewing them as two sides of the same coin. “Learning” is not something that needs to be fully outsourced to schools, nor must it be formally time-bound by academic calendars. Similarly, a “job” is nothing more than whatever someone is doing at any given time in the economic division of labor. It could be part-time or full-time, paid or unpaid, in-person or remote, in the public or private sector. Ending today’s artificial divide between theory and practice is the first task of a responsible parent who wants their children to be prepared for the real world.

The Covid pandemic catapulted home-schooling from obscure to mainstream. From Khan Academy to Coursera, dozens of online educational resources empowered parents to curate a personalized curriculum that didn’t require cumbersome remote Zoom classrooms. Not only did those who opted for home-schooling move at their own pace, but online platforms offering one-on-one mentoring also encourage project-based learning centered on individual interests. Covid thus inadvertently created a template for the self-directed pathway of today’s youth.

Parents have become empowered to think of the home as an applied learning venture studio where kids are encouraged to prototype year-round, whether weekdays, weekends and holidays. When Zara Khanna was eight, she coded a travel chatbot called Octa (www.octa.ai) to encourage kids to build their own itineraries and learn fun facts about cities around the world. Applied learning is the most enjoyable way to bridge theory and practice.

Think of the home, neighborhood, community – and the Internet – are the R&D lab where they discover their passions and from which they may branch out as they evolve through the stages of their startup life. Take inspiration from the emergent artefacts dominating daily life – whether Teslas or iPhones – and tinker with the guerilla, offroad versions. Don’t conform but customize. Nachson’s children are collaborating with Prem AI to design an AR wearable that stimulates mindfulness and appreciation of nature.

Parents may choose to emulate a certain VC archetype or combine their traits when thinking about how to best enable their kid’s startup journey. For example, Sequoia is known for backing iconic companies (Apple, Google, AirBnB) from their earliest days with unshakeable conviction in their capacity to become legendary. The aim is not short-term success (such as grades and trophies), but long-term character building, resilience and purpose. Andreessen Horowitz (a16z) is associated with strategic infrastructure, a full-stack approach to supporting portfolio companies from talent and operations to legal and communications. This approach connotes surrounding your child with the right team and counsel to thrive in complex environments. Benchmark Capital’s approach, by contrast, emphasizes founder autonomy without micromanagement. Belief is strong and guardrails are provided, but founders lead, fall and grow on their own. Then there is First Round Capital, which goes deep with its early-stage investments, immersing them in peer-to-peer learning communities and tactical playbooks. This curation provides security by way of networking in playgroups and clubs as well as emotional support among like-minded kids. Last but not least, the Kleiner Perkins approach is all about moonshots on world-changing ideas such as Sun Microsystems and Amazon. In this mode, no dream is too unconventional or crazy to encourage your child to turn into a business plan.

Whatever one’s north star, the VC mindset doesn’t have to be about winner-take-all blitzscaling. Nachson and Arieh Mimran’s to.org – which stands for “Tikkun Olam,” Hebrew for “heal the world” – promotes human optimization and people-planet co-existence. It backs companies and non-profits that are transformative and sustainable. Parag’s AlphaGeo is a to.org portfolio company that provides on-demand climate adaptation guidance for any location on Earth to enhance community resilience. Much as economists have begun looking beyond GDP numbers to account for societal wellbeing, we ask whether startups are making communities healthier. Parents should incubate for purpose as much as for profit.

Birth and early childhood are like the pre-seed and seed stages of life. In this phase, the child itself is the vision being brought to life. Parents are the founders, product designers and full-stack developers. Parents’ time is like sweat equity, helping their child learn by absorbing the world around it. The runway one gives a child at this stage is directed at fostering curiosity and exploration. The most important traits one can impart are life skills such as communication and empathy. One of our STEM-oriented teenage sons boastfully gave us some self-serving advice to share: “Don’t invest in your kids if they’re not good at math.”

Middle childhood (the pre-teen years) roughly corresponds to the A round. Your child begins to express serious interest in certain activities. They become a co-founder in training. Kids should be asking questions that amount to product-market fit: What kinds of things do they want to do? Are there problems or pain-points they think they can solve? Who might benefit from their ideas?

We believe kids should be the captain of their project from day one: articulating a vision, defining a strategy, learning the tech, defining a roadmap, assembling the team and managing the moving parts. At the same time, much as parents determine the rites of passage their children go through in life, whether religious or civic, venture parents can similarly identify milestones that are reviewed weekly, monthly, quarterly, and annually. KPIs or OKRs can be related to project performance but also physical, mental and spiritual fitness – and be rewarded with greater investment, independence from chores, less time at school, or other incentive.

Parents with real skin in the game have pioneered the hybrid study-play-work models that set the pace in today’s experimental landscape. Mackenzie Price started Alpha School in Austin after developing AI-powered “2 Hour Learning” modules that she used with her own children. Her husband Andrew Price is CTO of Trilogy Education, which has pioneered online coding bootcamps and other skills accreditation offerings.

Like partners in a VC fund, parents may not be equally committed to their kids’ ventures. They may choose to invest in differing priorities out of their own accounts. Or, more likely, one parent becomes the lead investor based on his or her competence and dedication. But just as VCs are good at saying no – so too should parents when the brainstorming crosses ethical or legal boundaries.

Adolescence represents the B round of the youth entrepreneurial journey. The baton of leadership is slowly being passed. Now a teen, the child steps up to make day-to-day decisions just as they would with respect to who their friends are, which hobbies they like most, and which subjects at school they enjoy. Parents become executive coaches, giving feedback on strategy, helping to weigh risks and consider all possibilities and responsibilities. You’re not alone at this stage. Global training academies such as The Knowledge Society, founded in Canada, provide courses and connections both online and in major cities, pairing up kids with similar interests and coaching them in how to successfully network and frame business plans.

By the time of young adulthood (roughly ages 16-18) your teen is now fully in the driver’s seat. They’re running the show morning to night, managing their team, iterating their product, handling customer service, building their networks, traveling for sales, and whatever else is required. Think of this as Series C. It may be time to add on outside investors, a process you can help them navigate with due consideration to your own tangible and intangible equity contributions to date. As the cap table expands, they report to you and other investors according to a mutually determined schedule.

Is it time for Series D: to “grow and go”? This is a crucial moment of transition when your child is not only CEO of their startup but is legally CEO of their own life. At this point, they come to fully own and control the vision and values, mission and operations, of their venture. You are likely still an investor and mentor, but your child may have moved out and live on their own or with their co-founders and friends.

While most families don’t have structured family offices with formal governance and constitutions, this is the time to spell out the org-chart of their financial relationships and designate roles for boards and advisors. While most VCs work with external capital, you’ve investing your own capital — emotional, spiritual, intellectual, and financial. This makes your stakes even deeper.

This is a reminder that you don’t need to be wealthy or wait until you’re old to build a legacy. Your children’s journey towards becoming your legacy begins in their infancy. Unlike venture capital, in parenting, the journey is also the destination. Success is not measured by the financial value of the “exit.” Rather, value derives from exposing children to how the world works, how to work with others, and how to solve problems. In that sense, parenting is what it always has been: lifelong teaching and learning.

These are the earliest innings of the new venture parenting model. Our call to action is not only to work with your children to imbue them with an entrepreneurial approach to life but to share your stories as we compile an open-access database from which all parents – and kids – can learn and take inspiration.