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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...

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What are the different types of anti-dilution terms and when are they used?

for term sheets

Top answer:

There are two types of anti-dilution protections for investors: full-ratchet and weighted average. They sometimes get used in priced rounds and are not typically found in Convertible Notes or SAFEs. These type of protections are not foun...

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Redeemable preferred warrants

What are best use cases for redeemable preferred warrants? I have heard they are most useful for seed rounds if founders want to maintain equity (by redeeming it) prior to a Series A, and I have also that they can be very expensive money. When does it make the most sense for an investor to issue them?

Top answer:

Sometimes, startups issue warrant coverage to sweeten the deal by providing investors with the opportunity to gain additional shares in the future at a lower price. Please note that most of the things you will 'hear' in the world of ven...

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What are your thoughts on the Solo Fund Manager versus Multi-Fund Manager Approach?

My experience with Venture Capital has seen funds that operate with a single fund manager and others with multiple fund managers. Often, performance is very similar and each respective fund sees the value in their own approach. As a third party, is there any major benefits going down the single fund manager or multi-fund manager approach?

Top answer:

It is critical for Managing Partners (founders of venture capital firms) to partner with people that they know extremely well and that they have had an extensive long-term working relationship. Partner breakups in VC firms have dire cons...

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Strategic Portfolio Management in Venture Capital

How do venture capital firms strategically balance their investment portfolios to mitigate risk and maximize returns, while considering factors beyond financial performance, such as social impact and environmental sustainability?

Top answer:

Venture Capital is a RISK asset class and a very optimistic style of investing. The objective of venture capitalists is to fund category defining startups with the potential to return the entire fund or more given that on average the maj...

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What is the best economic strategy for funds focusing on one sector?

I am particularly interested in healthcare, medtech and biotech startups in developing countries but I struggle to understand how specialized funds can minimize the risk of industry exposure. As an example, here in Brazil, the private healthcare system is at a record low, which in turn makes the entire industry struggle financially. How to minimize the risk on an industry performing bad when you are not diversifying sectors?

Top answer:

Venture Capital is a RISK asset class and a very optimistic style of investing. The objective of venture capitalists is to fund category defining startups, and by definition, it's really difficult to spot these companies if one is bearis...