How to manage a new or emerging venture fund

Share on linkedin
Share on twitter
Share on facebook
Share on email

There’s a ton of advice out there for startup founders on how to raise money, set up business infrastructure, and track performance in the early stages of a company’s life. But there’s not as much guidance for managers of new venture funds.

Raising, running, and reporting on a fund isn’t easy. We recently got together with Brooklyn Bridge Ventures and Foley Hoag to share some lessons for emerging fund managers. Read on for a summary of what we covered in our recent webinar, or check out the recording to hear all the details.   

Sell the opportunity

First things first — raising your fund. Fundraising is selling. You’re not asking investors for capital. You’re asking them to buy an opportunity. Here are the steps we recommend for raising your fund:

  1. Understand your prospect
    • What are their goals?
    • Are they high net worth individuals or family offices? (Most first-time funds don’t succeed at raising from institutional investors)
    • What are their non-financial terms?
  2. Create your pitch deck. Be sure to cover these key areas:
    • Your team — What sets you apart?
    • Your thesis — What types of investments will you make, and why?
    • Your target fund size
    • Your past returns
  3. Keep good records
    • Use a CRM or CRM-like system to track all the conversations you’ll have.
  4. Focus your efforts
    • Vet your funnel so you’re not wasting time.
    • Have a clear plan so you can keep your fundraising timeline as short as possible. Fundraising is a full-time job and you’ve got other work to do.

Set up shop

To run a fund, you’ll need some basic infrastructure in place. Start setting up your systems while you’re still out raising so that you’re ready when the money starts coming in. Here are the main steps you’ll want to take:

  1. Select your primary service providers
  2. Start budgeting
    • Track fund expenses
    • Set up your initial investments
    • Plan your first capital call
  3. Source other providers
    • Tax advisor, audit firm, and office space
    • Your investors and fund administrator can make recommendations
  4. Track your pipeline
    • Don’t miss out on good deals because you lost track of their emails.
  5. Get regular updates from your portfolio companies
    • Advise them to report on KPIs consistently, and share any asks they have of you.
    • Here’s a guide you can share about how to write a great investor update.

Keep your LPs engaged

Besides investing in winning companies, you need to communicate results to your investors. Your Limited Partnership Agreement (LPA) should spell out the reporting requirements, but typically funds report quarterly to show investment cost and current market value. Here’s how to make sure you’re keeping your LPs up-to-date:

  1. Determine your valuation policy
    • You’ll need to substantiate the values on your balance sheet.
    • Provide this to your audit firm, too.
  2. Track everything as you go, and report quarterly on:
    • Fund financials (balance sheet, income statement, schedule of investments)
    • Investor capital account statements
    • Highlights from company updates
    • Major changes at the firm
  3. Deliver an annual report, including audited year-end financials and tax reporting. This can be a lot of work because of the audit, so be sure to plan ahead.
  4. Consider an annual meeting or annual letter

Learn more

Our experts dove in on all of these topics and more in our webinar. Watch the recording to hear their insights.  


Stay up to date with monthly blog highlights

Related articles