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Methods and strategies to identify markers for success, and also failure?

Investing in startups and companies early in their development carries inherent risk. What are some methods or approaches to employ to assess and mitigate risks when evaluating potential investment opportunities? 

Top answer:

You may find this thread helpful. Since this is such a general question, it's very complicated to answer it. A biotech company will have different risks and opportunities vs SaaS. A pre-seed company will much riskier then a Series-B comp...

4

Is there a reliable source to map the # of Female- led VCs?

I am specially intersted in understand the impact of Females in VCs

Top answer:

No there is not. Venture Capital has historically been a very opaque industry where it's very difficult to obtain information. 

 -  Mike Suprovici
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Is there a limit for the number of venture partners in a venture capital fund?

Top answer:

No, there is not a limit to the number of venture partners in a venture capital fund. However, the more VPs the more challenging it is for the GPs to manage them. As a result, it's sub-optimal to have a lot of VPs for new or emerging fir...

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What are the costs of setting up a VC fund in Delaware?

Top answer:

Delaware formation with any reputable law firm can range from $50k - $100k+. Fund administration will typically range from $25k/year to $100k+ a year depending on a variety of factors related to the complexity of the setup. Both legal an...

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Deployment KPIs for first-time fund managers

What are the deployment KPIs required for first-time fund managers towards the goal of second fundraise?

Top answer:

On a high level, first time managers need to be able to demonstrate to LPs that they: • Invested in amazing companies in Fund 1  • They subscribed their target fund size • They operated their fund to the highest standards

 -  Mike Suprovici
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Does Decile Launch supports India or just Delaware and Ontario?

Top answer:

Decile Launch supports Delaware and Ontario as of this message but we are reviewing other domiciles for future expansion. Please review why Delaware is the domicile of choice for the vast majority of VC Firms here: https://govclab.com/20...

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What major changes in the VC model should we expect to see by the end of this year, as VC is evolving at a very fast rate?

Top answer:

We will not see major changes in the VC model. The traditional 2 and 20 model works really well for venture capital and LPs are slow to adapt to changes in structure. 

 -  Mike Suprovici
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Most effective way to find LPs

Is there the most effective way to find LPs or it would be a combination of ways? For example, direct introductions, VC events, etc.

Top answer:

The most effective way of sourcing LPs is via 1st or 2nd degree connections in their network. 

 -  Mike Suprovici
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Sprint clarification - landing page

The Sprint mentions designing a landing page. Is this the landing page on the domain we registered www.[fund name].com or do we need to design a landing page on decile hub https://[fund name].decilehub.com ?

Top answer:

You can use whatever tool you want for this task. 

 -  Mike Suprovici
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Pro-Rata Negotiations

What critical factors do Venture Capitalists prioritize in negotiating demands for Pro-Rata terms, given their case-by-case nature?

Top answer:

A large percentage of pre-seed and seed investments are made with YC SAFE notes, in those cases the YC pro rata side letter is the accepted baseline, which provides a right to purchase shares in the following equity (conversion) round at...

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How can we ensure compliance with current regulations such as SFDR (Sustainable Finance Disclosure Regulation) and Article 9? What are the best practices to start monitoring our portfolio's alignment with these regulations and effectively measure our sustainability impact?

Top answer:

As a general rule of thumb, fund managers avoid domiciling in the EU. Currently, the EU has a complex web of expensive and inefficient regulations that need to be adhered to, burdening fund managers with audits, fees, high taxes, regulat...

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DDQ and PPM

Are due diligence questionnaire and private placement memorandum required documents in order to attract serious / institutional LPs?

Top answer:

No, they are not required. Also, it's absolutely critical that new and emerging managers do not engage with any vendors including lawyers until they have a minimum of 10%+ of their fund hard circled in PACTs. Finally, institutional LPs r...

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What's the most ideal age of person to start a VC firm?

Is there any specific age of fund managers that LP's prefer? Is there any stats available about age of first time fund managers?

Top answer:

According to VC Lab's most recent nextgen manager report, 63% of new managers are over the age of 40, whereas only 5% are under the age of 30.

 -  Mike Suprovici
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Optimum diversification in pre-seed and seed stages

I would like to ask about the number of startup investments in both pre-seed and seed stages to reach optimum diversification for a Fund of about €10 Million. 

Top answer:

This is highly depended on the fund model and strategy. There is very big difference between pre-seed and seed. All factors considered here are some very high level guidelines: Pre-Seed:  ~50 companies Seed:         ~25 companies

 -  Mike Suprovici
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Conflict on thesis with LPs

What should I do if an LP encourages an investment which doesn't align with the investment thesis of the fund?

Top answer:

Limited Partners are 'limited' on purpose. The limitations protect the LP, GP and the fund. If a limited partner were to make an investment decision for the fund, they would loose their limited partner protections.  To answer your quest...

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Is there any resource to better understand how Venture Studio plays out in VC Lab, especially financially?

I have gone through the blog 'How to build a venture studio'.

Top answer:

Decile AI - "Yes, the fund in a venture studio can be used to test out ideas. This process involves deploying capital for market feedback before identifying the best ideas or models for larger investments. This approach is different from...

 - 
Community Member
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What are LPs looking for in emerging fund managers in this current market environment?

Hi everyone - as we all know, the venture fundraising scene has changed dramatically in the last year or so due to market conditions, global volatility/conflicts, interest rate growth, and so forth, In the future, after I get some experience under my belt, I do envision myself raising a fund. With that being said, and assuming the market environment remains as-is for the foreseeable future, has anyone observed what LPs are looking for in emerging fund managers amidst the existing fundraising climate? If anyone has heard directly from LPs, that would be great insight as well! 

Top answer:

Assume that everything you hear in the media about Venture Capital is wrong. Journalists are working off bad data and the opinions of a few old VCs that are becoming irrelevant. VC Lab accelerator participants had the best fundraising mo...

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When assessing the performance and potential of a startup in our portfolio, what are the key metrics that should be focused on?

Wonder if there are any general key metrics applicable across different industries when evaluating startups or if these metrics differ based on specific industries? If we need to specify, what are the key metrics to consider for emerging industries like AI-related ventures?

Top answer:

Great question, and I think the answer can vary depending on the stage at which the company is at. In other words, the metrics for a pre-seed/seed stage company will differ vastly from a more mature, Series C/D company. I think at the ea...

 - 
Community Member
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Do Fund Managers need to file an 83(b) for acquiring Shares in the ManCo or GP entity (via the ManCo)?

Top answer:

Generally speaking, no - Fund Managers do not need to file an 83(b) election with respect to acquiring Shares in the ManCo or GP entity (via the ManCo). An 83(b) election is only required when acquiring Shares that are subject to vesting...