All Questions

PACTs have ~6 months effective window. They are non-binding letters of intent, and there is no set timing. As with most things, ‘time is the enemy of all deals’

PACTs have ~6 months effective window. They are non-binding letters of intent, and there is no set timing. As with most things, ‘time is the enemy of all deals’

Anything that is not a yes is a no. Move on. You need to be pursuing dozens of people simultaneously. Compliance is a relatively easy issue to solve with larger companies. He or she just needs to submit the materials for review and appro...

Anything that is not a yes is a no. Move on. You need to be pursuing dozens of people simultaneously. Compliance is a relatively easy issue to solve with larger companies. He or she just needs to submit the materials for review and approval. It can take time, but it is not hard. Hesitation means that they are not interested.

You would ‘Warehouse’ this deal into your fund. This is a common practice which makes your fund more attractive to investors. Basically, you would move your investment into your fund. LPs would invest in your fund and get a return onc...

You would ‘Warehouse’ this deal into your fund. This is a common practice which makes your fund more attractive to investors. Basically, you would move your investment into your fund. LPs would invest in your fund and get a return once a liquidity event takes place from this deal.

Generally speaking, hard no and nowhere.  A fund usually cannot solicit investors publicly, irrespective of how many closes it has completed. However, a fund can (carefully) do PR to attract entrepreneurs as investment targets for capita...

Generally speaking, hard no and nowhere.  A fund usually cannot solicit investors publicly, irrespective of how many closes it has completed. However, a fund can (carefully) do PR to attract entrepreneurs as investment targets for capital deployments. For more information, please read this: https://govclab.com/2022/06/28/general-solicitation/

For small funds, the managers frequently take distributions and do not get paid as either an employee or as a contractor. Only when the fund sizes are above $20 MM do managers start looking at salaries, and the salaries are reserved for ...

For small funds, the managers frequently take distributions and do not get paid as either an employee or as a contractor. Only when the fund sizes are above $20 MM do managers start looking at salaries, and the salaries are reserved for junior team members without carry.

Most LPAs don't give LP this option without specific approval which may be withheld.

Most LPAs don't give LP this option without specific approval which may be withheld.

You are expected to contribute 1% of the target fund size as your GP commit. Tell the LP that you are following the standard protocol, and do not let them bully you around. If they want to join the closing great. If they want to push you...

You are expected to contribute 1% of the target fund size as your GP commit. Tell the LP that you are following the standard protocol, and do not let them bully you around. If they want to join the closing great. If they want to push you around for a small amount of money, then you don't need them in the close. *Your time is too valuable. You should not even be engaging in these conversations with anyone investing less than $1 MM.*

The Management Company owns the brand. So yes, you’re usually branding for the management company. When you get to your 2nd or 3d decade with multiple funds under the Management Company, you may set up funds with different focuses that m...

The Management Company owns the brand. So yes, you’re usually branding for the management company. When you get to your 2nd or 3d decade with multiple funds under the Management Company, you may set up funds with different focuses that may have a slight deviation like Sequoia India, but not much.

Rolling Funds by AngelList are a distinct product for part-time amateur or prosumer fund managers. The pros are: - They are easy to set up - There are tools to manage them - They have a community of opportunities The cons are: - The m...

Rolling Funds by AngelList are a distinct product for part-time amateur or prosumer fund managers. The pros are: - They are easy to set up - There are tools to manage them - They have a community of opportunities The cons are: - The manager is a consultant, not an owner of the fund - Managers do not get fund credit for their track record - The fees and expenses are very high As a rule, VC Lab and Decile Group do not support Angel List products because they are designed for managers that are not serious about the craft of running a venture capital firm.

No. Build a relationship first. Then, when they give you an indication that they want they want to invest, send them a PACT.

No. Build a relationship first. Then, when they give you an indication that they want they want to invest, send them a PACT.

They are fundamentally different models. With an accelerator - the entrepreneurs come up with the ideas and you provide limited resources. With a venture-studio, you came up the ideas and you provide resources to help. You will have a lo...

They are fundamentally different models. With an accelerator - the entrepreneurs come up with the ideas and you provide limited resources. With a venture-studio, you came up the ideas and you provide resources to help. You will have a lot of complexity with respect to managing various conflicts of interest. Try to focus one model for V1. It sounds like you’re doing a venture builder. Focus on that for now.

It can, yes. Generally, these end up being distractions. Make great investments, and that is where all of the money will come from.

It can, yes. Generally, these end up being distractions. Make great investments, and that is where all of the money will come from.

The odds of this happening are less than 5%, maybe 1% or 2%. Don’t waste your time. Have them chase you.

The odds of this happening are less than 5%, maybe 1% or 2%. Don’t waste your time. Have them chase you.

The smallest realistic venture capital fund size is $2 MM, and this would be domiciled in Delaware, the cheapest place to form and run a fund. The reason for the $2 MM minimum is that set up and operating costs can easily be $200,000 or ...

The smallest realistic venture capital fund size is $2 MM, and this would be domiciled in Delaware, the cheapest place to form and run a fund. The reason for the $2 MM minimum is that set up and operating costs can easily be $200,000 or more for a fund. Set up can cost $50,000 or more, and annual expenses can easily run $15,000 or more. As a rule of thumb, you don’t want your fund expenses to be 10% or greater of the fund size. At a $2 MM fund size, the low estimate of $200,000 for expenses is 10% of the fund size. 

You can invest up to ~20% off thesis. But just because you can, it doesn’t mean you should. In the scenario above you should AVOID it. It is CRITICAL that your first investments are on thesis because that’s how you PROVE the thesis to f...

You can invest up to ~20% off thesis. But just because you can, it doesn’t mean you should. In the scenario above you should AVOID it. It is CRITICAL that your first investments are on thesis because that’s how you PROVE the thesis to future LPs that will come into subsequent closings.

No it does not count as your track record if you invest though a friend. 

No it does not count as your track record if you invest though a friend. 

Assume that all conventional wisdom is either old or wrong. Now, there may be contractual rules that prevent a general partner from raising a new fund before deploying an old fund. Outside of contractual limitations, it is very common to...

Assume that all conventional wisdom is either old or wrong. Now, there may be contractual rules that prevent a general partner from raising a new fund before deploying an old fund. Outside of contractual limitations, it is very common to see general partners deploy and raise at the same time. It is hard to do. Think about it this way. If you are deploying and raising at the same time, then your are deploying from Fund 1, raising Fund 2 AND possibly also deploying from Fund 2, all simultaneously. That's tricky.