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Should I Invest 100K (10%) in My First €1M Close Instead of Standard 1/2% GP Commitment for More Skin in the Game?

Should I put as much as an LP (100K) directly in my first close of €1M (20% of target final close of €5M) instead of the standard 1/2% GP commitment (20k on 1M) because if I fail to raise beyond my 1st close of €1M I will not have in his view enough skin in the game?

Top answer:

You are expected to contribute 1% of the target fund size as your GP commit. Tell the LP that you are following the standard protocol, and do not let them bully you around. If they want to join the closing great. If they want to push you...

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Is There a Distinction Between Fund and Management Company Branding, and When Should We Develop the Latter?

Is there typically a distinction between the branding for your fund and the branding of the overall Management Company? If so, when would we start working on the branding of the Management Company (given that we are now working on the branding for the fund)?

Top answer:

The Management Company owns the brand. So yes, you’re usually branding for the management company. When you get to your 2nd or 3d decade with multiple funds under the Management Company, you may set up funds with different focuses that m...

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Have you had experience with Angel List rolling funds? What are the pros and cons?

Have you had experience with AngelList rolling funds? What are the pros and cons?

Top answer:

Rolling Funds by AngelList are a distinct product for part-time amateur or prosumer fund managers. The pros are: - They are easy to set up - There are tools to manage them - They have a community of opportunities The cons are: - The m...

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Is it appropriate to directly ask strangers about investing in our fund, or should we be more subtle?

Hi all we are trying to reach out to potential LPs but our personal network is limited to connectors. If we were to consider reaching out to strangers from outside our network can we be direct and ask them if they are interested in investing in our fund? Or do we have to phrase it as “Are you interested to find out more?”

Top answer:

No. Build a relationship first. Then, when they give you an indication that they want they want to invest, send them a PACT.

 -  Mike Suprovici
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Can a Startup Studio and Accelerator Model Be Combined for Initiating and Investing in Companies?

Anyone knows about combining a startup studio (initiating companies) and an accelerator model (investing in existing startups while offering them studio services)?

Top answer:

They are fundamentally different models. With an accelerator - the entrepreneurs come up with the ideas and you provide limited resources. With a venture-studio, you came up the ideas and you provide resources to help. You will have a lo...

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Can Operating Companies Generate Revenue from Sources Other than Management Fees, such as SaaS Products or Conference Ticket Fees?

Can the operating company have other sources of revenue than management fees (e.g. from a SaaS product ticket fees for a conference)?

Top answer:

It can, yes. Generally, these end up being distractions. Make great investments, and that is where all of the money will come from.

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What questions should be asked to a fund of funds who is interested in being an anchor investor?

What questions should be asked to a fund of funds who is interested in being an anchor investor?

Top answer:

The odds of this happening are less than 5%, maybe 1% or 2%. Don’t waste your time. Have them chase you.

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What is the smallest realistic fund size?

What is the smallest realistic fund size?

Top answer:

The smallest realistic venture capital fund size is $2 MM, and this would be domiciled in Delaware, the cheapest place to form and run a fund. The reason for the $2 MM minimum is that set up and operating costs can easily be $200,000 or ...

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Is it okay to invest above the thesis?

Is it okay to invest above the thesis?

Top answer:

You can invest up to ~20% off thesis. But just because you can, it doesn’t mean you should. In the scenario above you should AVOID it. It is CRITICAL that your first investments are on thesis because that’s how you PROVE the thesis to f...

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Is it still generally expected to fully deploy a fund before starting the next one?

Is it still generally expected to fully deploy a fund before starting the next one?

Top answer:

Assume that all conventional wisdom is either old or wrong. Now, there may be contractual rules that prevent a general partner from raising a new fund before deploying an old fund. Outside of contractual limitations, it is very common to...

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Is it advisable to warehouse a deal with an LP before having a first close?

Is it advisable to warehouse a deal with an LP before having a first close?

Top answer:

You should try to invest in personally. Investing with an LP doesn’t usually work and it’s not that beneficial for the LP.

 -  Mike Suprovici
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After closing do venture partners keep an active role in the fund?

After closing do venture partners keep an active role in the fund?

Top answer:

It depends on your agreement with them, but most are active after closing, yes. Venture partners can serve various roles: https://govclab.com/2022/03/10/venture-share/

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What’s your take on corporates as LP?

What’s your take on corporates as LP?

Top answer:

Corporate LPs take 9 to 18 months to close, and require about 500 to 1,000 hours of follow-up and due diligence. They also are often prohibited from investing in new managers, and traditionally have a <5% close rate. If you are prepared...

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How should I think about trademark considerations?

How should I think about trademark considerations?

Top answer:

Funds are viewed as high profile targets for lawyers, so choose a safe name that does not have conflicts with other trademarks.

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Community Member
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What Resources Can Help Educate Potential LPs on Venture Capital Startups and Investment Mechanics in Paraguay's Emerging Ecosystem?

Are there any resources that could help me with educating potential LPs about venture capital startups risk investment mechanics standard documents etc. in a super young ecosystem like Paraguay?

Top answer:

Send LPs VC Lab's guide to investing in VC: https://govclab.com/2023/04/26/how-to-invest-in-vc/

 -  Mike Suprovici
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What are the downsides of raising under 506c (in public)?

What are the downsides of raising under 506c (in public)?

Top answer:

You/your fund admin, will need to re-verify LPs after a certain time period to ensure they are accredited investors. Very large LPs are not going to be comfortable disclosing their financial or tax information and it's very likely that t...