How to Raise a VC Fund?
Source: Alex Pattis
Before you go out to raise a first fund, there are a few basic things you’ll need to show to be taken seriously:
1. Track record; what deals have you done and how are they performing?
Many people want to skip this because they think they have a good/unique deal flow.
You’ve got to show you can do this role in some capacity before LPs will give you their money.
2. Sourcing / Competitive edge to get into deals; why & how do you get into the best deals?
Not many people have a good/unique answer here. Again, could you show it before you try to raise a fund?
Above are just the most basic things you should have before progressing down the path of a fund. It takes a lot more to successfully raise a fund.
Below are 7 Tips from Michael Hirshland (Co-founder, Resolute Ventures) on how to raise a venture fund:
1. Do your best to meet LPs before you raise.
2. Be prepared to get a lot of "No's."
A direct and early no is way more valuable than a strung-out maybe. Try to flesh out latent passes early.
3. Do your homework and know your audience.
When raising a $50-$75 M fund, don't waste time trying to get a meeting with an institutional LP only to learn their check is $1-5 M. Also, don't waste time with an LP prospect who isn't adding new managers in your category.
4. Be clear on your "edge."
How and why are you different and what is your advantage?
5. Be clear on your weakness.
Instead of covering it up, own it and build a narrative to make it a strength.
6. Be clear on your superpower.
Even if it doesn't directly relate to the venture.
7. Tell a story.
Be yourself, share who you are, and build a narrative on how will this lead to outsized success. Then, pitch it with 100% conviction.