I think this is a very interesting idea ...
First Round Capital is letting its entrepreneurs swap part of their equity for equity in the fund, thereby allowing them to diversify their risk a bit, and participate in the overall success of the fund.
Beyond the diversification strategy, this is potentially powerful stuff, especially for funds with synergistic investments ... i.e. where the entrepreneurs can benefit from supporting and/or cross-leveraging each others products.
Could this be the start of a trend? Dare I say, Venture 2.0?
Read the original TechCrunch article here