Questions a Potential Venture Fund Limited Partner Should Ask

This is going to be BIG.

Will the experience of partnering with this individual be a positive one? I have a draft deck put together for a next Brooklyn Bridge Ventures fund. I pretty much hate it. Don't get me wrong--the numbers look great. That's not it. It just doesn't really get at what's really important. I wasn't sure exactly how it missed, so I went back to first principles. What *is* really important for a venture fund?

The Experience of Being a Limited Partner in Venture Capital

This is going to be BIG.

Either way, VC funds aren't really built around creating much of an experience for their Limited Partners. Partnership investing is boring. You give someone your money and, once a quarter, they give you a report that says what they did with your money. That's because, for the most part, fund investors fall into two categories: institutions and individuals. If you're an institution, you basically care about returns and that's it.

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Limited Partner Due Diligence on Venture Capital and Private Equity Funds

David Teten

Similarly, our limited partner investors have their own due diligence standards, and we manage HOF Capital to keep in line with their standards and expectations. Ask on what KPIs each Partner is evaluated. As a VC, I have a standard due diligence list for companies I’m reviewing.

Limited Partner Due Diligence on Venture Capital and Private Equity Funds

David Teten

Similarly, our limited partner investors have their own due diligence standards, and we manage HOF Capital to keep in line with their standards and expectations. – Specifically if you’re in the process of joining a fund: How to Negotiate a Partner Role at a Venture Capital or Private Equity Firm. Ask on what KPIs each Partner is evaluated. The post Limited Partner Due Diligence on Venture Capital and Private Equity Funds appeared first on David Teten.

VC Governance FAQ: (8) How can a limited partner exit from a VC fund?

Pascal's View

Answer: The options here are limited, and they are (1) the LP can try to sell their interest, including the obligation to fund future capital calls, to a fund that acquires secondary interests. It is far less disruptive to the GP and to the GP-LP relationship for the exiting partner to sell to a secondary buyer, but these buyers are totally financially driven and are going to get the best deal possible for themselves.

LP 28

VC Governance FAQ: (10) Are limited partner defaults on capital commitments triggering a wave of lawsuits in the venture industry?

Pascal's View

This is the last in our series of 10 frequently asked questions from investors in venture capital partnerships. Susan Mangiero , CEO of Investment Governance’s Fiduciary X , asked me the following: Question: I’ve read that some GPs are suing LPs for not making capital calls. The LPs claim that they are cash constrained and/or the VC fund has not performed. Why throw more money their way? Do you see a trend here of broken contracts?

LP 28

VC Governance FAQ: (6) Are contract terms in partnership agreements shifting in favor of institutional Limited Partners?

Pascal's View

This is the sixth in our series of ten frequently asked questions from investors in venture capital partnerships. Susan Mangiero , CEO of Investment Governance’s Fiduciary X , asked me the following: Question: You had some thoughts about contract terms. Do you think the trend is shifting in favor of institutional LPs to receive better terms? Answer: Certainly as the sources of capital have become more selective and scarce, the GPs have had to become more aware of LP concerns over terms.

Friday Funism – Favorite Future

View from Seed

sometime back in 2010 or early 2011) one of the limited partners we met with asked us what our “favorite future” was for NextView. Another phrase we use internally at NextView pretty often is that of a “favorite future”. Early in NextView’s history, when we were raising our first fund (e.g. We were excited to talk about our vision and aspirations for the new VC firm we were building, but also intrigued by this as a general question.

Austin-based Next Coast Ventures Raises $85 Million Fund

SiliconHills

The fund was oversubscribed by $25 million and its limited partners include leading institutional investors, funds of funds and family offices. Next Coast Ventures announced Thursday that it has closed on its debut fund at $85 million. Next Coast Ventures is looking at investing in deals in Austin and in the middle part of the […] The post Austin-based Next Coast Ventures Raises $85 Million Fund appeared first on SiliconHills. Austin

A Slow, Painless Death

Babbling VC

The same goes for the LP's (limited partners) that invest in venture funds. We're so misled by what we often read in blogs and press stories or see on TV shows. One way or another, we tend to react to drama and they who produce content feed on this.

LP 184

Micro-VC fund management and capital account statements

David Cohen

She told me that most of her Limited Partners (investors in her fund) didn’t seem to care about the frequency of capital account statements. I’m a personal investor in about 20 micro-VC funds.

Blue Collar VC

Mucker Lab

Just as entrepreneurs should aspire to raise capital from value-added, “smart money” investors, we, too, have focused on partnering with committed, long-term, institutional limited partners (LPs). We are consumed with generating great returns for our limited partners. Four years after founding and bootstrapping Mucker Capital , we are pleased to announce the close of a new $45 million fund, Mucker III.

Friday Funism – “Favorite Future”

Agile VC

sometime back in 2010 or early 2011) one of the limited partners we met with asked us what our “favorite future” was for NextView. Reading Time: 2 minutes. This post also appears at NextView’s blog. Another phrase we use internally at NextView pretty often is that of a “favorite future”. Early in NextView’s history, when we were raising our first fund (e.g.

Time Diversity In VC Portfolios

Haystack

And, the more funds that are raised, the more fees VCs can collect, which are contractually guaranteed in limited partner agreements.Only time will tell which approach is best or optimal. A topic that’s been on my mind a lot in 2019 is “time diversity” in venture capital funds.

How do venture capital firms make money by investing in startups?

Gust

The general partners of a venture capital fund make money… …by raising the bulk of the capital that the fund’s investable capital from “Limited Partners”, usually institutions such as university endowments, insurance companies and pension funds. Invested Interests capital company general partners investing IPO startup venture capital fund

Does A Business Bankruptcy Hurt My Personal Credit?

YoungUpstarts

General Partner. What if the business doesn’t belong to you, but several general partners ? That being said, if partners start suing other partners and you lose and fail to pay up, that’s probably going to hurt your credit score. Try keep everything friendly when going bankrupt with partners, but don’t dissolve the partnership and leave the business in the hands of a single proprietor. Limited Partner.

VC’s Are Not Your Friends

Steve Blank

Their fiduciary responsibility was to manage a portfolio of investments for their limited partners. At the end of the day VC’s have to provide their limited partners with great returns or they aren’t going to be able to raise another fund.

Five Questions for Vetting an Investment in a New or Emerging VC Fund

This is going to be BIG.

A lot of VC fund pitches—and I know this because I used to vet VCs for a living as an institutional limited partner at a pension fund—sound the same. If you want to learn more about how VC funds get evaluated and you’re either an accredited investor, a non-partner at a VC fund, or work on behalf of a family office, check out this event tomorrow.

How is the VC Asset Class Doing?

View from Seed

The trends described above in VC performance have an upstream effect on Limited Partners which is somewhat counter-intuitive. One of my more popular posts in recent years was a long write-up on how VC’s get measured.

LP 215

Why the Blockchain is so disruptive for venture capital

Version One Ventures

Blockchain and ICOs are giving VCs new ways to run their own businesses – from changing agreements with limited partners to allow the fund to buy tokens and currencies directly to figuring out how to safely store token and currencies. These days not a single meeting with a fellow VC goes by without talking about Blockchain and how to invest in this space. We are all a bit puzzled by how quickly this market has evolved.

Fundraising Hacks for Venture Capital and Private Equity Funds

David Teten

Historically, the process of winning capital from limited partners has been opaque. LIMITED PARTNERS’ PERSPECTIVE. Origins is a podcast about Limited Partners, created by VC Notation Capital. Denis Tse: Fund Management Craftsmanship: An LP’s Food for Thought for Emerging VC General Partners. GENERAL PARTNERS’ PERSPECTIVE. However, in the last few years a few have started to use social media and become more transparent.

How to Build a Startup & Understanding Venture Capital

Both Sides of the Table

Venture capitalists raise money with a goal of returning 4x the amount they raise to their Limited Partners (LPs). Many first-time founders seek advice when thinking about what ideas would be great for a startup company and receive the wrong advice that you need to focus on a billion-dollar idea. There are very few ideas that are obviously a billion-dollar idea from the start. So what should you do?

VC Firm Creation Versus VC Firm Building

Haystack

This isn’t the only example, of course, but it’s the most recent one and illustrates what the bar is for building a team of GPs and limited partners. Earlier this year, I reflected on the difference between “fund investing” vs “fund management.” ” It’s a useful post for emerging managers, I’d recommend reading it.

Chad 90

High Functioning vs. Low Functioning Startup Boards

Both Sides of the Table

Here are some observations I have from this exposure: If a company moves from strength-to-strength with predictable outcomes, easy financings, low staff turn-over, limited competitive threats then the composition of the board probably doesn’t matter as much. Every year I invited my largest investors to NYC to have an LPAC meeting (Limited Partner Advisory Committee?—?kind

LP 252

What Founders Need to Know: You Were Funded for a Liquidity Event – Start Looking

Steve Blank

VC’s raise money from their investors (limited partners like pension funds) and then spread their risk by investing in a number of startups (called a portfolio). In exchange for the limited partners tying up capital for long periods by in investing in VCs (who are investing in risky startups,) the VCs promise the limited partners large returns that are unavailable from most every other form of investment. There are many reasons to found a startup.

Get 10 years of experience in 3 years running the most active venture fund in Texas

Austin Startup

You will work closely with Joshua Baer, Gordon Daugherty, Bryan Chambers, the Ventures Team, limited partners, external venture capitalists, lawyers, accountants and startup CEO’s to review legal agreements, perform our diligence checklist, and make sure transactions close in a timely manner. You will coordinate and administer the most active venture capital fund in Texas and see an insane amount of dealflow. You’ll know the inside details about almost every deal that goes down.

Working Out Your Startup’s Taxes With Your Cofounder

YoungUpstarts

In a partnership, the partners share ownership of and responsibility for the financial well-being of the enterprise. When you are planning to file your taxes as a partnership, it is important to get on the same page with your business partners and co-founders.

The Easiest Way to Bring Diversity to Venture Capital: Raise the SEC's LP Count Limit

This is going to be BIG.

Barely 10% of the investing partners at VC firms are women and the number of investors of color is microscopic. Unfortunately, the way the Limited Partner landscape is setup and the nature of SEC rules, emerging managers are fundraising with their hands tied behind their back.

LP 89

Katie Rae and the Engine at MIT

David Cohen

We became a Limited Partner in Project 11 when it launched and Katie continues to mentor at Techstars regularly. Everyone who knows Katie Rae at Techstars is thrilled that she’s taken a lead role with The Engine at MIT, a new venture fund and incubator space there. Katie was the Managing Director at Techstars for our Boston program from 2010 to 2014.

Lessons from a Diverse Venture Capital Portfolio

This is going to be BIG.

All were backed based on the sole criteria that they had the potential to make my limited partners a lot of money. Brooklyn Bridge Ventures , the pre-seed and seed stage VC fund I run in NYC, has invested in 64 companies in the last six and a half years. Twenty-five of them have at least one female co-founder. Fifteen had co-founders over 40. Five have LGBTQ+ founders. Three teams have African-American founders. Three of the founding teams are married couples.

Money. show me! If you want to change Venture Capital, focus on LPs. #openlp

This is going to be BIG.

In venture, it’s all about getting an opportunity to make partner and being included in the carry—the economic upside of a fund. If firms held back the economics, keeping things only for partners who were growing long in the tooth, some of the best new investors they had would bolt for other firms or start their own. Mentorship and the building of track records within other people’s firms is an important pathway to partner, even in your own fund.

Announcing K9 Ventures II – A $40M technology-focused micro-VC fund

K9 Ventures

This new $40M fund is backed by several high quality institutional limited partners including university endowments, foundations, family offices and fund of funds and key individuals. I’d like to thank each of the new limited partners in K9 Ventures II for their support and for the confidence they have expressed in me and in K9 by making this commitment. I am pleased to announce the formation of K9 Ventures II, L.P. – A $40M technology-focused micro-VC fund.

Announcing K9 Ventures II – A $40M technology-focused micro-VC fund

K9 Ventures

This new $40M fund is backed by several high quality institutional limited partners including university endowments, foundations, family offices and fund of funds and key individuals. I’d like to thank each of the new limited partners in K9 Ventures II for their support and for the confidence they have expressed in me and in K9 by making this commitment. I am pleased to announce the formation of K9 Ventures II, L.P. – A $40M technology-focused micro-VC fund.

When Does a Seed Stage Company Need a Board with More Than Just the Founder?

ithacaVC

One final thought – what about the VC’s fiduciary duties to its own investors (called limited partners). It is reasonable to think that the limited partners would expect their money managers (i.e., I think many limited partners would answer “yes” Love to hear your thoughts on this. I recently engaged in a conversation (over a few days) about the need for a seed stage company to have a board member other than the founder.

A Deep Dive into What Has Really Changed in Venture Capital

Both Sides of the Table

Yes, VC / Startup Funding is up Massively If you look at how much VC firms have raised from Limited Partners (LPs) over the past 2 decades you’ll see that we’ve returned to a level that we haven’t seen since 1999. I’ve heard a lot of people question whether there is too much money in venture capital chasing too few great deals. “We’re We’re in a new tech bubble!” some have pronounced. Valuations are out of control” is the mantra of others.

Shut Up and Invest? Investors Weighing in on Politics

This is going to be BIG.

It’s an entirely fair question—and the risk is that limited partners, founders, or other VCs might not want to work with me because I’m vocal about my political views. As a solo General Partner, my firm is me—and there isn’t a difference between investor Charlie and personal Charlie. Limited partners judge my investment acumen. For the last two years, I’ve been pretty vocal about politics on social media , in my weekly tech community newsletter and on this blog.

Writing Checks Doesn't Make You an Investor

This is going to be BIG.

If you're a VC, you should do whatever you can to make your limited partners feel like investors. I met with a family office investor yesterday and we were talking about his family's interest in diversifying their investments into early stage companies. They mostly participated in real estate transactions--an asset class where actual due diligence is conducted, deals take months, even years to close, and assets are sometimes held for decades.

Content From LPs

Feld Thoughts

My partner Lindel Eakman wrote a post a few days ago about his transition from Austin to Boulder and a really helpful one about how to work with him titled A Human User Interface….with This prompted me to poke around for other content from the limited partner (LP) side of the LP/VC/entrepreneurship universe. A few blogs I found include Top Tier Capital Partners , Weathergate , and Sapphire Ventures (on Medium).

LP 97

How to Break into a Senior Business Position at a Growing Startup

This is going to be BIG.

Smaller funds are always looking for limited partners and co-investors in their deals—so starting an angel group or just being willing to make such introductions in your network goes a long way. You’ve got a great resume. You went to top schools, trained at a prestigious bank/consulting firm/etc, and you’ve succeeded in the corporate world doing some important and impactful stuff. Now you want to take that skillset over to the startup world and you’ve got a lot to offer.

Startup Valuations Revisited Again

ithacaVC

Fred’s post hits some really interesting points on how valuations can actually impair limited partners (those investing in the VC fund) more than general partners (those running the fund). I have posted on startup valuations a couple of times. First on October 12, 2012 and then on November 28, 2012. On June 27th Fred Wilson wrote a post called Valuation vs. Ownership. Great post.

Details of Upfront Ventures New $400 Million Fund

Both Sides of the Table

A huge thank you to all of the Limited Partners who have entrusted us with your capital, time and reputations. Upfront’s Base As you probably know we are based in Santa Monica and as my partner Greg Bettinelli coined, we’re #LongLA. We’ll invest in about 15 new companies every year or just over 2 per partner. The investment partners are Yves Sisteron (the founder), myself, Greg Bettinelli , Kara Nortman , Kobie Fuller & Kevin Zhang.

Welcome to the Lost Decade (for Entrepreneurs, IPO’s and VC’s)

Steve Blank

VC’s invested their limited partners’ “risk capital” in a portfolio of startups in exchange for illiquid stock. Suddenly there was a public market for companies with limited revenue and no profit.

IPO 240

How long does it take for investors to approve the idea and to grant the necessary investment?

Gust

Instead, they have a limited amount of money entrusted to them by limited partners, and they invest in a very, very few companies each year. The question is based on a misunderstanding of how venture capital investment works. First of all, VC funds do not invest in ideas. What VCs invest in are operating companies that are ready (or almost ready) to scale. There are many wonderful ideas, all of which are not fundable. Only companies get funded.