As a starting member of TI Platform Management, I have quarterbacked more than $200 million in investments into novice fund supervisors worldwide. That portfolio includes being one of the very first institutional look into Atomic Labs ($170+ million, SaaStr ($160+ million) and Business owner First ($140+ million), amongst numerous others.
Having seen effective returns as a fund supervisor and an early-stage VC (in addition to recently raising my own angel fund), I’ve developed several finest practices and methods for investing in fund managers. If you want to raise your very first fund, here’s how.
Comprehend the mentality of an LP
Just as VCs bucket startup creators into categories, restricted partners (the investors in your endeavor fund, also known as “LPs”) have an unwritten way of classifying venture supervisors. The large bulk fit one of 3 archetypes:
- Former founder/operator turned VC
- Spin-off supervisor from a mega fund
- Angel financier with a strong performance history
Here’s how each is perceived by institutional LPs and the special blockers they have to overcome:
Former founder/operator turned VC
Having been through the journey of starting a company, former founders/operators often have strong instinct in determining founders and an empathy/rapport that raises their win-rate on deals. In addition, having actually constructed an ingenious company, they can bring special insights in where the marketplace is headed. Developing a company, nevertheless, requires various abilities from establishing a fund.
If you’re a previous founder/operator turned VC, expect LPs to ask questions that suss out:
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.