Founders demand more than just capital from their investors. Funds must innovate, build lasting relationships with founders, and open more doorways for portfolio companies to grow. Subsequently, there is an incredible opportunity for emerging managers to differentiate themselves in the early-stage venture space by building trust and scaling their capacity to deliver a ‘hands-on’ touch. But if you are a first-time emerging fund manager, starting and raising a fund requires a lot of effort— you have your work cut out for you:
Raising a fund.
Sourcing deals.
Supporting portfolio founders.
Growing and promoting your brand.
Raising your next fund.
Just like a startup founder will work tirelessly to build their company, pitch their company to investors, and sell their product to customers— venture funds must build their fund, pitch their fund to Limited Partners (LPs), and sell their product to the founder ecosystem. In the case of venture, you are in the business of selling money. Just like a startup founder, emerging fund managers are prone to burn-out and health challenges — working long hours, traveling for extended extended periods, etc.
Therefore, it is just as essential to ensure you are clear about why you want to build a fund and what specifically about it inspires you. Your motivation must be intrinsic. Take some time to reflect on these questions:
Why do you want to start a venture fund?
What do you see in the venture space that others don’t?
What good thing comes to you and others when you raise a fund?
What might you lose that you value if you don’t raise a fund?
If not venture, what else would you consider doingIf it is what you love, then you will think about it, talk about it, obsess about it, and dream about it.
Is investing of high-intrinsic value to you? For example, people who value capital naturally invest their money (after basic expenses) as a priority versus spending it.
Would you invest money whether you were paid to do it or not?
Deploying capital can be one of the most rewarding experiences— it is very financially lucrative when done right, you can make friends for life, and you can witness the evolution of some of the best up-and-coming companies. But before getting into venture, we recommend having a clear and strongly defined why.