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. Rather than see LP interactions as a chore or a burden, new fund managers should see this as an opportunity to extend the community around their fund. 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.

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. I wrote a little while ago about how to assess this: – For assessing any organization: Ready to Join a New Management Team? – 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.

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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. I wrote a little while ago about how to assess this: – For assessing any organization: Ready to Join a New Management Team? – 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.

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. The post Micro-VC fund management and capital account statements appeared first on Hi, I'm David G. I’m a personal investor in about 20 micro-VC funds.

VC Governance FAQ: (1) How much information are limited partners (pensions, endowments, foundations, etc.) entitled to receive from a VC fund?

Pascal's View

It’s that time of the year again– time to send out audited financial statements and K-1’s to your limited partners– which means it’s also a great time to address some of the common questions that investors raise about VC partnership governance and disclosure issues. Question: How much information are limited partners (pensions, endowments, foundations, etc.)

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15 Steps to Fundraising for Your New Venture Capital or Private Equity Fund

David Teten

I’ve been fortunate to be a Partner at two different VC firms over the past 9 years, and we’ve grown AUM 10X both times. Build the firm as much as possible before you solicit limited partners. . Note that limited partners view formatting as a proxy for professionalism.

Flexible VC, a New Model for Companies Targeting Profitability

David Teten

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. As two fund managers employing Flexible VC, we think it is a healthy addition to the ecosystem and will yield more predictable and stable healthy returns for investors. Financial management obligation.

How We Think About Values Versus Deeply Held Beliefs

Feld Thoughts

” Each of our funds is $225 million, we have four partners and no other investment staff, and we work out of the same office we’ve worked out of since we started in 2007. Until we created this fund, we limited the amount that we could invest in a company to $15 million. With Select, we are no longer limited to investing $15 million per company. Management culture deeply held beliefs fg angles foundry group select matt blumberg return path values

VCs eating our own dog food: Using technology and analytics to make better investments

David Teten

But in business, you want a lot of partners. However, in private markets, there is more room to optimize across all 11 steps of the investing process: firm management , marketing, fundraising , origination , manage relationships, due diligence, negotiation, monitoring, portfolio acceleration , reporting, and. 1) Manage the firm . Before you can actually invest, you have to manage your fund. I’ve used Asana extensively to manage activities firm-wide.

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. Board of Directors Dealing with VCs Management Startup Life

How VCs Structure a Syndicate and Recruit Coinvestors

David Teten

First, a formal definition: According to Capital Dynamics , “Co-investments are direct investments in a company made alongside and on the same terms as a lead [General Partner]. GPs strategically invite trusted [Limited Partners and others] to co-invest, often based on the LP’s ability to add value or when the amount of capital required to complete an attractive transaction is larger than they are able to invest alone.”.

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’ve written code, launched products, acquired users, managed P&Ls, and lost sleep over making payroll. We’ve been on founding teams and worked from entry level through executive management. We are consumed with generating great returns for our limited partners.

A Slow, Painless Death

Babbling VC

You would presume that management would in these situations raise an alarm and make sure that things are addressed before they are irreparable. The same goes for the LP's (limited partners) that invest in venture funds. Internal politics being what they are at companies, most managers go quiet when real trouble starts to brew. Even worse, when the responsible manager moves on, the buck is often passed.

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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. In addition, every year, the managers of the fund (the GPs), are entitled to pay themselves 2-3% of the total amount of the fund to pay their expenses and salaries. (In

How Private Equity and Venture Capital Investors Are Eating Their Own Dogfood

David Teten

PEVCTech is partnering with Blue Future Partners to run the first large-scale survey of VCs’ technology stack. Johann Kratzer of Blue Future Partners , a fund of funds, observed, “The majority of the hundreds of funds we’ve diligenced rely predominantly on their relationships to source deals. Greylock Partners. A major angel group used Influitive , an advocate management tool, to track, activate and motivate their members. 4) Manage deal flow.

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. I work hard to create working relationships with my fellow non-management board members in the same way that every investor ultimately works to develop strong working relationships with founders.

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How to Get Superior Returns in Venture Capital

David Teten

A friend of mine interviewed for a job with massively successful hedge fund manager Steven A. That said, one limitation in early-stage investing particularly is that 2022’s growth sectors probably don’t fit neatly into a vertical we can define today. a “Bitcoin Fund”, a “Social Media Fund”, a “Nanotech Fund”), you’re going to raise capital from Limited Partners who are very focused on Theme X. – Thoughtful fund management.

How to Get Superior Returns in Venture Capital

David Teten

A friend of mine interviewed for a job with massively successful hedge fund manager Steven A. That said, one limitation in early-stage investing particularly is that 2022’s growth sectors probably don’t fit neatly into a vertical we can define today. a “Bitcoin Fund”, a “Social Media Fund”, a “Nanotech Fund”), you’re going to raise capital from Limited Partners who are very focused on Theme X. – Thoughtful fund management.

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. I think the key point is — folks managing third-party capital should go on their own journey to learn this topic and figure out what the best flight plan is for their own fund and LPs.

Come Join Us at Foundry Group: Hiring a Head of Network

Feld Thoughts

The Foundry Network , as we’ve been calling it, encompasses founders, CEOs, executives, general partners of our underlying venture capital fund investments, limited partners (our investors as well as other investors in the funds we have investments in), and other members of our ecosystem.

VC Firm Creation Versus VC Firm Building

Haystack

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. The gist of that post is – making investments is relatively easy, but learning to manage a VC fund is very complex and hard to learn. I should be clear, not everyone who manages capital needs to build a firm in the traditional way — I do not, for instance.

Chad 90

Fundraising Hacks for Venture Capital and Private Equity Funds

David Teten

Historically, the process of winning capital from limited partners has been opaque. A few years ago, I presented at an Invesco conference on Emerging GPs, and one of the highlights was a presentation by Laurie Weir summarizing CALPERS’ selection criteria under their Private Equity Emerging Manager Program Review. Their Report gives granular detail on what they are looking for — and avoid — in fund managers. LIMITED PARTNERS’ PERSPECTIVE.

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.

With So Many Options for Marketing Your Business, What Content Should You Promote Where?

David Teten

At HOF Capital , we try to manage these layers to be “ MECE ” (Mutually Exclusive, Collectively Exhaustive). To the extent possible, we try to use our social media presence to point back to our website, our Partners, and/or our portfolio companies’ websites. For MECE purposes, whenever one of our potential clients (a limited partner) give us questions, many of our answers are along the lines of, “Please see the slide _ in our deck” or “See [link].”.

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. One of the biggest mistakes entrepreneurs make is not understanding the relationship they have with their investors. At times they confuse VC’s with their friends. Lets Go to Lunch.

This Friday at NYU-Annual Stern Private Equity Conference

David Teten

Keynote Speakers are Andrea Bonomi (Chairman of Investindustrial), Mark Dzialga (Managing Director and Chairman of the Investment Committee at General Atlantic) & me. In addition, there will be 8 thematic panels: Leveraged Buyout, Real Estate, Energy, Distressed, Venture Capital & Growth, Media & Entertainment, Emerging Markets, and Limited Partners & Secondaries.

Katie Rae and the Engine at MIT

David Cohen

Katie was the Managing Director at Techstars for our Boston program from 2010 to 2014. 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.

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. This changed their interest from managing your board for their liquidity to managing the board for all shareholders.

IPO 263

VC and Marking Investments to Market

ithacaVC

Some VC firms use the art of Level 3 inputs to mark up their valuations, which has a tendency to make limited partners happy. It is easy to tell your LPs that the valuations are conservative… Dealing with VCs ManagementIt is the time of year when VC firms do year end valuations for their portfolio company holdings. While not as bad as water boarding, this exercise always makes my stomach turn. Luckily, I am not in charge of the internal finance function at our fund.

How to Scale a Venture Capital (or Private Equity) Fund

David Teten

Managers of VC funds typically want to grow their business aggressively, just like the founders we back. But, we normally have a clear ceiling on how high we can grow AUM, before hitting practical limits to deploying capital within the traditional VC model. . My Partners at HOF Capital are younger than I am, which means that we have a half-century horizon for the franchise we are building. – Hire more non-Partner staff. – Hire more Partners.

Too Much Communication – NEVER

ithacaVC

Our VC partners at a firm are constantly asking “what’s going on with XYZ company” Frequent communication from the CEO helps us give good answers to our partners. You should assume that “update” type emails from CEOs are forwarded to partners inside our VC firms. Hope you had a great long weekend… Board of Directors Dealing with VCs Management Startup Life I have posted about communication often.

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 they haven’t done this math, they shouldn’t be managing your money. 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 to Scale Support of Portfolio Companies

David Teten

We have lower AUM, therefore lower management fees. We think coaching is a key lever for doing this, with our own team or through outside partners. For example, our limited partners have major ownership interests in such companies as Adidas , LafargeHolcim (largest building materials manufacturer in the world), and SuperNAP International (developer of data center facilities worldwide; used by Amazon, Intel and Microsoft).

Come Join Us at Foundry: Hiring a Head of Network

VC Adventure

The Foundry Network , as we’ve been calling it, encompasses founders, CEOs, executives, general partners of our underlying venture capital fund investments, limited partners (our investors as well as other investors in the funds we have investments in), and other members of our ecosystem.

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. If you get into a high-growth company and you have asymmetric information on how the management team is performing?—?this I’ve heard a lot of people question whether there is too much money in venture capital chasing too few great deals. “We’re

The LP Opportunity to Change Tech Culture

thebarefootvc

Limited partners (LPs), who manage the capital that gets deployed into venture capital funds, can play an important role in diversifying the funding landscape. Limited partners are pension funds, university endowments, funds of funds (who get their money from pension funds), family offices and foundations. The reality is that many underrepresented fund managers start off with small funds and go through several fund cycles to build to a $100M fund.

LP 57

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. Now, with that as background, it will typically take one to three months to negotiate and diligence a venture investment, if the company manages to get one at all. The question is based on a misunderstanding of how venture capital investment works. First of all, VC funds do not invest in ideas.

Details of Upfront Ventures New $400 Million Fund

Both Sides of the Table

This brings our combined funds under management to nearly $2 billion. 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. And Stuart Lander is also a partner and runs all operations and platform teams.

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. Instead, the responsibility for paying taxes lies with the individual partners. The partner will attach this document to his or her personal IRS Form 1040 or individual return for the tax year.

Similarities between raising a venture fund and raising for a startup

The Equity Kicker

I know this because fur much of this year I’ve been on the road for Forward Partners and when I tell entrepreneurs what it’s like they smile, give me a knowing nod like we’re insiders together, and say “it’s just like raising for a startup” The basic similarities are lots of meetings, unpredictable processes, lots of wasted time, and a feeling that there really ought to be a better way.

What’s Your VC Tech Stack? Results from a Survey of Early-Stage VC Funds

David Teten

(written by Philipp von dem Knesebeck , Managing Partner, Blue Future Partners (bluefp.com, @bluefutureteam ), and David Teten ). As a globally focused LP in early stage VC funds, we at Blue Future Partners have observed a growing trend of firms investing substantially in software tools, whether developing proprietary solutions or adopting off the shelf tools. What tools to VCs use to manage their deal flow and internal processes?

What’s a typical day like for a full-time angel investor?

Gust

If you mean someone investing mostly other people’s money through a seed fund, they are venture capitalists, and their days are spent like other VCs, meeting with prospective investments, mentoring portfolio companies, raising money from limited partners, negotiating deals, and so forth. There is no such thing as a full-time angel investor (or if there is, I’ve never met one.).

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. Most LPs are trying to manage some targeted asset allocation. And over time, if VC is performing well, the LP may actively manage up their allocation to venture. One of my more popular posts in recent years was a long write-up on how VC’s get measured.

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