Fundraising

Just start helping amazing companies without any expectations of equity. Help them get to new rounds of financing. Then, you will build network effects, and maybe some of the founders will introduce you to other founders or offer you the...

Just start helping amazing companies without any expectations of equity. Help them get to new rounds of financing. Then, you will build network effects, and maybe some of the founders will introduce you to other founders or offer you the opportunity to invest in their next round.

We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in...

We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in a bad negotiating position. If you want to offer something, offer a discount on SPVs to invest in your follow-on into portfolio companies, and you can offer this as a handshake agreement.

We strongly recommend that you do not take investments into the Management Company. The Limited Partner will own your outcomes for decades. Instead, the best practice is to take investment into the General Partner, which is converted in ...

We strongly recommend that you do not take investments into the Management Company. The Limited Partner will own your outcomes for decades. Instead, the best practice is to take investment into the General Partner, which is converted in our Stewardship Agreement below. Investors buy a Class V position to take preferred ownership of the carried interest without voting control: Password: Cohort4

It will be extremely challenging for a first time manager to raise a $50m fund. The majority of LP archetypes do not invest in new managers. You should raise a smaller fund to prove out the thesis and to build your track record. Then, us...

It will be extremely challenging for a first time manager to raise a $50m fund. The majority of LP archetypes do not invest in new managers. You should raise a smaller fund to prove out the thesis and to build your track record. Then, use this to raise a larger fund.

C-corps have certain tax implications that will not not make fund investing viable in many cases. Most funds are setup as flow-through entities such as LLCs.

C-corps have certain tax implications that will not not make fund investing viable in many cases. Most funds are setup as flow-through entities such as LLCs.

This is prohibitively expensive. You need a $25 MM fund size to justify this, and it really would only work if you had many LPs and portfolio companies in both jurisdictions. The EU is too expensive as a domicile for most new managers. ...

This is prohibitively expensive. You need a $25 MM fund size to justify this, and it really would only work if you had many LPs and portfolio companies in both jurisdictions. The EU is too expensive as a domicile for most new managers. The minimum fund size is $15 MM to $25 MM to domicile in the EU. VC Lab is exploring ways for EU funds to domicile in the US, as well as setting up a lower cost alternative domicile in the EU.

Absolutely not. You can not incentivize Venture Partners with commissions because that would be in violation with numerous broker dealer laws. 

Absolutely not. You can not incentivize Venture Partners with commissions because that would be in violation with numerous broker dealer laws. 

It's not legal in most jurisdictions to compensate individuals based on fundraising goals due to various broker-dealer regulations. 

It's not legal in most jurisdictions to compensate individuals based on fundraising goals due to various broker-dealer regulations. 

Hurdle rates and net return multiple are very uncommon in Venture Capital funds. 

Hurdle rates and net return multiple are very uncommon in Venture Capital funds. 

One of the most effective activate weak connectors is to have them make a connection to another connector. 

One of the most effective activate weak connectors is to have them make a connection to another connector. 

If 95%+ of investments are in dollars, keep it in dollars and talk with your bank about their capabilities on this matter.

If 95%+ of investments are in dollars, keep it in dollars and talk with your bank about their capabilities on this matter.

You can't use deals done through SPVs as track record unless you sourced and led the syndicate. 

You can't use deals done through SPVs as track record unless you sourced and led the syndicate. 

Yes, Venture Partners can also be LPs. However, if they make investment decisions for the fund, that may affect their limited partner status. 

Yes, Venture Partners can also be LPs. However, if they make investment decisions for the fund, that may affect their limited partner status. 

No. Send them a PACT after they have indicated interest.

No. Send them a PACT after they have indicated interest.

It’s just a no. I would not put too much weight on the reasoning for now. That being said, for your reference, VC is a good way for families to build inter-generational wealth.

It’s just a no. I would not put too much weight on the reasoning for now. That being said, for your reference, VC is a good way for families to build inter-generational wealth.

You can send them a teaser if you want. They are looking for a reason to say no the meeting.

You can send them a teaser if you want. They are looking for a reason to say no the meeting.

We don’t recommend any of the above platforms. AngelList and Allocations are designed for part-time investors or amateurs and Carta has various operational issues. Please do not engage with any of them, and don’t spend any time on this r...

We don’t recommend any of the above platforms. AngelList and Allocations are designed for part-time investors or amateurs and Carta has various operational issues. Please do not engage with any of them, and don’t spend any time on this research until you have a minimum of 10% of your fund hard circled or $1m in PACTs whichever is greater. With regards to cost, this will be paid for by the fund (your LPs) as an organizational expense.

I recommend (1) call, (2) email follow up, (3) PACT, (4) deck and (5) meeting. This is a similar approach this is outlined in the Decile Hub stages layout.

I recommend (1) call, (2) email follow up, (3) PACT, (4) deck and (5) meeting. This is a similar approach this is outlined in the Decile Hub stages layout.

Larger LPs generally do not invest in new managers, and donor-advised funds are a vehicle targeted at larger LPs.

Larger LPs generally do not invest in new managers, and donor-advised funds are a vehicle targeted at larger LPs.

Build a rebuttal by saying that startups are being launched everywhere now and, a lot of alpha will be generated in the future outside of SF. There are a lot of stats that show this.

Build a rebuttal by saying that startups are being launched everywhere now and, a lot of alpha will be generated in the future outside of SF. There are a lot of stats that show this.

From an LPs perspective, the stage is being standardized as pre-seed right now, so use that. When you use the term Angel, it indicates that you’re doing an Angel group model, which is quite different because you’re essentially syndicati...

From an LPs perspective, the stage is being standardized as pre-seed right now, so use that. When you use the term Angel, it indicates that you’re doing an Angel group model, which is quite different because you’re essentially syndicating the deal within the group.

You will pay yourself with the 1st capital call. It is possible to have a side job before you do the 1st capital call.

You will pay yourself with the 1st capital call. It is possible to have a side job before you do the 1st capital call.

a. you do this in in the bios folder by including their CV which should highlight some of their achievements b. you redact the name of the companies

a. you do this in in the bios folder by including their CV which should highlight some of their achievements b. you redact the name of the companies

There are general solicitation issues, and the there are pitch control issue. First, your deck should never be sent without a document managment system, like Decile Hub. From a general solicitation standpoint, this should not be done, t...

There are general solicitation issues, and the there are pitch control issue. First, your deck should never be sent without a document managment system, like Decile Hub. From a general solicitation standpoint, this should not be done, technically. It’s better to send an exciting blirb about you and get a meeting first without mentioning the fund. From a pitch control standpoint, I have never seen a deck really help. It creates an easy way for the prospect to say no without meeting. It’s always better to get a meeting, build rapport, and then do the deck in a second meeting. Most larger family offices have investment processes that involve due diligence. Some take months. It’s important to meet with them to understand their process. *Don’t send the deck. Get the meeting.*

Angel deals are great if you can show the companies are growing. LPs don’t care much about the # of deals. It’s how successful you were with investing in those deals.

Angel deals are great if you can show the companies are growing. LPs don’t care much about the # of deals. It’s how successful you were with investing in those deals.

There has to be a contractural relationship for you to receive money. They either need to invest in the Limited Partnership or the General Partnership.

There has to be a contractural relationship for you to receive money. They either need to invest in the Limited Partnership or the General Partnership.

As you accelerate your pitching you will use a PACT to collect interest. Then after you have $1m+ or more collected in PACTs, your law firm will help you incorporate all the entities and governing docs. Then you will send LPs an LPA to s...

As you accelerate your pitching you will use a PACT to collect interest. Then after you have $1m+ or more collected in PACTs, your law firm will help you incorporate all the entities and governing docs. Then you will send LPs an LPA to sign. 

You should try to build some rapport before you discuss the topic. Then, the questions should be something like this: 1. Do you invest in new mangers? 2. How many have in invested in last year?

You should try to build some rapport before you discuss the topic. Then, the questions should be something like this: 1. Do you invest in new mangers? 2. How many have in invested in last year?

Yes you can disclose the terms. It’s usually not good practice to mention co-investors unless you have permission.

Yes you can disclose the terms. It’s usually not good practice to mention co-investors unless you have permission.

You can not generally solicit interest from LPs and there are no “secret lists” that work. You need to use Connectors and mine your existing network to find LPs. If you are going to do an event, it needs to be a small private dinner or ...

You can not generally solicit interest from LPs and there are no “secret lists” that work. You need to use Connectors and mine your existing network to find LPs. If you are going to do an event, it needs to be a small private dinner or gathering where all invited are known and wealthy. Follow the guidance in the weekly find building Sprints, and you will meet and cultivate LPs.

You can remove the Anchor section in your Fund Overview document if you don't plan to have one, which is common for new and emerging managers.

You can remove the Anchor section in your Fund Overview document if you don't plan to have one, which is common for new and emerging managers.

Tell them that the PACT is non-binding and that you will share your data room with them after the sign a pact. Providing more info will not close the deal. It’s usually the opposite.

Tell them that the PACT is non-binding and that you will share your data room with them after the sign a pact. Providing more info will not close the deal. It’s usually the opposite.

Rolling funds are great for part-time angel investors that want to add more structure to their practice. They are very sub-optimal for enduring venture capital firms. They are also very difficult to manage when you have a small fund beca...

Rolling funds are great for part-time angel investors that want to add more structure to their practice. They are very sub-optimal for enduring venture capital firms. They are also very difficult to manage when you have a small fund because of all the infrastructure costs, unless you use a platform like AngelList. However, AngelList owns the entities and the bank account, so it’s impossible to build and enduring VC firm on it. Finally, most LPs are not familiar with them and you will make your fundraise significantly more challenging. If your goal is to build an enduring VC firm, rolling funds are very difficult to scale.

No. First close them (money in the bank). Then, you may ask them for permission to use their name in future closes.

No. First close them (money in the bank). Then, you may ask them for permission to use their name in future closes.

No. You should avoid this. Say something like: out of respect for their privacy we will not disclose this information, and we would not do that with you either should we get a similar request in the future.

No. You should avoid this. Say something like: out of respect for their privacy we will not disclose this information, and we would not do that with you either should we get a similar request in the future.

You don’t need to be accredited to manage a fund.

You don’t need to be accredited to manage a fund.

Limited Partners need to be accredited in the US by the US standard for a fund domiciled in Delaware.

Limited Partners need to be accredited in the US by the US standard for a fund domiciled in Delaware.

Here’s a cleaner incentive: minimum check size will go up in the 2nd closing

Here’s a cleaner incentive: minimum check size will go up in the 2nd closing

Most jurisdictions have limits on the number of Limited Partners, and they also have accreditation standards for investing LPs. As a rule of thumb, you don't want a lot of LPs to manage, so you want to try and limit the number to 50, may...

Most jurisdictions have limits on the number of Limited Partners, and they also have accreditation standards for investing LPs. As a rule of thumb, you don't want a lot of LPs to manage, so you want to try and limit the number to 50, maybe 75. Now, you may want some strategic investors at the $50K level, so you make the first close minimum $50K, let in a few strategic LPs, and then raise the minimum to $100K or $250K.

An advisory board member is a Venture Partner. We have created standards around compensation, which you can find here: https://govclab.com/2022/03/10/venture-share/ It can be useful to have a VP that helps with fundraising but you can’...

An advisory board member is a Venture Partner. We have created standards around compensation, which you can find here: https://govclab.com/2022/03/10/venture-share/ It can be useful to have a VP that helps with fundraising but you can’t make the carry transactional. So for example - you can specify a quota of intros in exchange for carry. However, our agreement supports vesting and you can use that as mechanism to ensure performance.

Just use your track record. VPs are not full time and they are not as valuable from the LPs perspective.

Just use your track record. VPs are not full time and they are not as valuable from the LPs perspective.

Well - you’re not an emerging manger. You’re a new manager. And, sadly, many of these FoFs don’t fund new managers very often. I think you need to focus on what you can realistically close and deploy. You can always over-subscribe and yo...

Well - you’re not an emerging manger. You’re a new manager. And, sadly, many of these FoFs don’t fund new managers very often. I think you need to focus on what you can realistically close and deploy. You can always over-subscribe and you can mention that should some FoF push back on the fund-size (which is really just a NO in disguise). Say: Great - we’re open to oversubscribing and our model allows for that. And, we’re open to it if we bringing the right partner onboard.

It depends on the LP For HNWs a good data room is about it. Same for smaller family offices. However, for larger LPs they will reference check your portfolio, which is why your deal memos are important, as well as your legal and will ver...

It depends on the LP For HNWs a good data room is about it. Same for smaller family offices. However, for larger LPs they will reference check your portfolio, which is why your deal memos are important, as well as your legal and will verify the back office team. 

The best practice is to *not* share the names of investors with a prospect until their are signed on themselves.

The best practice is to *not* share the names of investors with a prospect until their are signed on themselves.

Just put in your fund's name. This is a non-binding document so don’t worry about it too much. 

Just put in your fund's name. This is a non-binding document so don’t worry about it too much. 

Yes, you should standardize on one currency. 

Yes, you should standardize on one currency. 

That is a “no”, so put them on the newsletter and move on. This is a process of managing a funnel with a few hundred people on it. Any signal of a “no,” is a no.

That is a “no”, so put them on the newsletter and move on. This is a process of managing a funnel with a few hundred people on it. Any signal of a “no,” is a no.

PACTs have ~6 months effective window. They are non-binding letters of intent, and there is no set timing. As with most things, ‘time is the enemy of all deals’

PACTs have ~6 months effective window. They are non-binding letters of intent, and there is no set timing. As with most things, ‘time is the enemy of all deals’

Anything that is not a yes is a no. Move on. You need to be pursuing dozens of people simultaneously. Compliance is a relatively easy issue to solve with larger companies. He or she just needs to submit the materials for review and appro...

Anything that is not a yes is a no. Move on. You need to be pursuing dozens of people simultaneously. Compliance is a relatively easy issue to solve with larger companies. He or she just needs to submit the materials for review and approval. It can take time, but it is not hard. Hesitation means that they are not interested.

You would ‘Warehouse’ this deal into your fund. This is a common practice which makes your fund more attractive to investors. Basically, you would move your investment into your fund. LPs would invest in your fund and get a return onc...

You would ‘Warehouse’ this deal into your fund. This is a common practice which makes your fund more attractive to investors. Basically, you would move your investment into your fund. LPs would invest in your fund and get a return once a liquidity event takes place from this deal.