Creating an enduring VC firm, though the aspiration of many ambitious individuals who have the goal of impacting the world, is something that a tiny fraction of people succeed in doing.
To successfully launch a venture fund and convince investors to part ways with their money, one has to master several crafts. You should aim to perfect fundraising, become an expert in your field, source great deal-flow, learn fund mechanics, and have a compelling thesis/alpha among other things.
We’ll briefly explore two of the key aspects mentioned above; developing a thesis and fundraising.
Thesis
A compelling thesis can take months to conceptualize and sometimes even years to actualize. At VC Lab, we’ve helped many fund managers to raise funds in a fraction of that time.
We’ve found that to develop an LP backable thesis, one has to come up with a compelling case of how the future of a certain market will look as a consequence of things such as a new technology, business model, event…etc to gain outscaled returns. You also should also seek to demonstrate that you are a good custodian of LPs money by leveraging your track record of success and execution as well as your network.
Below is our compehensive and proven guide to refining your thesis
Fundraising
Having a compelling thesis is a good start, however, it does not end there. Fund managers should also look to master the art of fundraising.
Fundraising has always been difficult and convincing LPs to invest in your vision in an illiquid asset class can at times be a challenging task.
Firstly, it’s important to understand the profiles of LPs and their investment criteria. New fund managers often make the mistake of focusing on the wrong LPs, which leads to costly time inefficiencies.
Below is our brief into which LPs are typically best suited for new venture firms
We’re now seeing major disruption in fundraising due to the pandemic. Investors across the globe have adopted a hybrid approach to pitching. The process will typically begin with a virtual call upon which if successful, LPs will commit to an in-person meeting.
We recommend that fund managers take advantage of the adoption of virtual meetings to massively increase the volume of communication with potential limited partners. Additionally, when meeting in person we’ve found that scheduling said meets around VC conferences can be a gamechanger for all fund managers. This saves time and allows you to create traction in your fundraising process. It also enables you to expand your network of LPs and get to your close much faster.
Below is our guide to pitching and fundraising hacks from veteran fund managers
