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How To Raise A Venture Capital Fund: The Essential Guide on Fundraising and Understanding Limited Partners - Paperback | Diverse Reads

How To Raise A Venture Capital Fund: The Essential Guide on Fundraising and Understanding Limited Partners

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Despite all of the writing on venture capital, there is a missing part of the literature. There has been no book written about raising a venture capital fund. It remains a secret to a few privileged venture capitalists who have gone through this fundraising process. Until now . . .

This book serves as a guide. It dives into the process of raising a venture capital fund, the how-tos, the unique language of the limited partner (LP) world, secrets of how LPs think about fund diligence and alignment, the best practices in fundraising, what works, and how you can best prepare for success.

I've written this book after spending a decade investing into venture capital funds at a $30B wealth management firm and a $160B technology company. I've been on both sides of the table, the VC and the LP side. I've been behind the scenes managing every aspect of the fundraising process, investing into 80 funds, and reviewing thousands of fund investments. I also co-founded a company that specifically focuses on co-building venture capital businesses, which includes helping VCs understand the intricate dynamics of raising a venture capital fund. After reading my book, you will gain the knowledge and insights gained from these experiences.

ISBN-13: 9781736234303

Media Type: Paperback

Publisher: Winter Mead

Publication Date: 01-01-2021

Pages: 204

Product Dimensions: 6.00(w) x 9.00(h) x 0.47(d)

Table of Contents

Foreword 1

Why I Am Writing This Book 3

Introduction 5

Venture Capital And The Main Players Involved In Raising A Venture Capital Fund 5

What Is Venture Capital? 5

Who Are The Main Players In This Book? 6

Why Do LPs Invest In VCs? 12

What Is The Legal Structure Of A Typical Venture Capital Fund? 13

What Are The Mechanics Of Investing Into A Venture Capital Fund? 15

Prologue: The Four Phases Of Fundraising 19

Phase 1 Planning 21

Chapter 1 Self-Evaluation And Deciding On The Path Of A VC 23

Fundraising Mindset 23

Recognize The Reality 24

Know Your Value 25

Understand When The Right Time Is 25

Form The Team 26

Fund Size 29

Determine Strategy 29

Chapter 2 Designing Your Fund's Investment Strategy 33

Why A Limited Partner Should Choose Your Strategy 33

How Will You Make Money? 35

What Is The Market (Growth) Opportunity? 35

Setting Your Values And What You Stand For 37

Fund Size And Portfolio Construction 39

Chapter 3 Plan And Prepare Your Fundraising Materials 41

Introduction 41

Necessary Documents To Have During Fundraising 43

"Nice-to-have" Documents to Have During Fundraising 54

The Data Room 60

Chapter 4 Creating A Fundraising Plan - Targeting Limited Partners, Pre-marketing, And A Flexible Mindset 71

Create A List Of Target Limited Partners 71

Pre-marketing 77

Maintaining A Flexible Mindset 82

Phase 2 Fundraising 85

Chapter 5 Reaching Out To And Interacting With Limited Partners 87

Pre-marketing Is Over: Let The FUN-draising Begin 87

Contacting And Interacting With Limited Partners 89

Initial Meeting 91

Follow-up Meeting 99

Processing Feedback 100

Chapter 6 Due Diligence 103

Due Diligence 103

Operational Due Diligence AKA Operations Review 126

Legal Due Diligence AKA Legal Review 131

Phase 3 Closing The Fund 133

Chapter 7 Building Your Limited Partner Base 135

Introduction 135

Building Your Limited Partner Base 136

Diversification And Key Characteristics 140

Chapter 8 Negotiating The Limited Partnership Agreement And Side Letter 147

The Final Approach To Closing The Fund: Executing The Legal Documents 147

The Side Letter 153

Chapter 9 Logistics Of Closing A Venture Capital Fund 157

Introduction 157

Subscription Agreement 166

Phase 4 LP Relations & Raising the Next Fund 169

Chapter 10 Managing The Limited Partner Relationship After Closing The Fund 171

Introduction 171

LP Engagement And Communications After The Close 172

What Are Specific Ways A VC Interacts With An LP? 176

Engaging Your Limited Partner Advisory Committee (LPAC) 181

Winding Up 182

Compendium: Key Takeaways 183

Epilogue 185

Appendix Terms 187