All Questions

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

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

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 ...

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 more for a fund. Set up can cost $50,000 or more, and annual expenses can easily run $15,000 or more. As a rule of thumb, you don’t want your fund expenses to be 10% or greater of the fund size. At a $2 MM fund size, the low estimate of $200,000 for expenses is 10% of the fund size. 

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...

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 future LPs that will come into subsequent closings.

No it does not count as your track record if you invest though a friend. 

No it does not count as your track record if you invest though a friend. 

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...

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 see general partners deploy and raise at the same time. It is hard to do. Think about it this way. If you are deploying and raising at the same time, then your are deploying from Fund 1, raising Fund 2 AND possibly also deploying from Fund 2, all simultaneously. That's tricky.

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

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

Read VC Lab's General Solicitation guide: https://govclab.com/2022/06/28/general-solicitation/

Read VC Lab's General Solicitation guide: https://govclab.com/2022/06/28/general-solicitation/

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/

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/

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...

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 to spend that kind of time and effort for an LP, then go for it. :pray:

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

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

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

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

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...

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 they will pass on investing in your fund.

The long-term capital gains tax rate is 0%, 15% or 20% depending on your taxable income and filing status. Additionally investing in Section 1202 Qualified Small Business Stock could eliminate any tax burden for non-corporate LPs.

The long-term capital gains tax rate is 0%, 15% or 20% depending on your taxable income and filing status. Additionally investing in Section 1202 Qualified Small Business Stock could eliminate any tax burden for non-corporate LPs.

Try to avoid telling LPs who else is investigating. It's bad practice to name drop. You just don't know if they like each other.

Try to avoid telling LPs who else is investigating. It's bad practice to name drop. You just don't know if they like each other.

A Delaware 3 entity structure is strongly recommended if your goal is to build an enduring VC firm. 

A Delaware 3 entity structure is strongly recommended if your goal is to build an enduring VC firm. 

If the contact that you asking for feedback from is not excited about what you are doing and not engaged to learn more, then your Thesis is not good enough. Most of the time, specific feedback is not useful. Measure success of your Thesi...

If the contact that you asking for feedback from is not excited about what you are doing and not engaged to learn more, then your Thesis is not good enough. Most of the time, specific feedback is not useful. Measure success of your Thesis by their engagement. If they are not a “yes,” then they are a “no.” Paul spoke about this in the webinar today.

Ideally 0% of fund capital is laying around in cash before deployment into an investment. If you have a lot of money in your bank account you messed up.

Ideally 0% of fund capital is laying around in cash before deployment into an investment. If you have a lot of money in your bank account you messed up.

Your operations will be outsourced to vendors like Decile Partners. Also, don’t work with people you don’t know really well.

Your operations will be outsourced to vendors like Decile Partners. Also, don’t work with people you don’t know really well.