The things you need to think about when setting yourVenture fund target

  • Do I have any definable edge for the business model that relates to my contemplated fund size?
  • How does my product value to founders and co-investors differ across fund sizes? At larger check sizes, % ownership, and % allocation of a round, the height of the product bar you need to clear changes dramatically. Going from small non-lead positions to lead positions requires an entirely different product profile, business model, and operational mindset.
  • Who are my competitors at different fund size bands, and within which cohort is my product and offering the most competitive and why?
  • Is the strenght of my brand aligned with fund size? Often, I see fund managers look to upsize significantly from fund to fund well in advance of establishing the type of brand equity that enables them to be consistently competitive with the new cohort of competitors.
  • Does the fund size optimize returns for my LPs (and for my partnership)? From experience, I’ve seen managers produce exceptional returns within a fund size band and then poorly perform when going too far above that band. VC is undoubtedly the consummate long game, and it’s vital to align fund size to where your highest competitive edge lies at that given point in time. The difference between a 5X on a $15MM fund vs. a 2X on a $35MM is 4.2X Net for LPs and $12MM in Carry for the GP vs. a 1.8X Net for LP’s and $7MM in carry for the GP. Optimize fund size for what best aligns with competitive edge.

--

--

--

VC/tech advisor, venture blogger, active angel investor, banker

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Finding the ONE, the start-up in the start-up nation.

James Williams of Mayweather Boxing + Fitness: How We Plan To Rebuild In The Post COVID Economy

Networking? Pretty sure you are doing it in a remarkably wrong way

Kevin Collins of Charli AI: Five Things I Wish Someone Told Me Before I Became A CEO

8 Guiding Principles on Angel Investing

Stop Your AEs from Ruining Your Outbound Demos — An Actionable Guide

5 Reasons Entrepreneurs Must Be Salespeople More Than Visionaries

Empower Women in STEM with Our Partners in the Private Sector

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
samir kaji

samir kaji

VC/tech advisor, venture blogger, active angel investor, banker

More from Medium

Taming the Unicorns: Retooling Silicon Valley’s Fallen Stars

Inovia Q4: closing the year with over US$4B in portfolio financings & the launch of a new…

VCs, HealthTech & Repeated Rejection

The Debut Venture Fund Landscape