The Blueprint to Launching A Successful VC Fund (2021)
Learn how to start your own investment fund investing into startup companies
In the last 20 years the startup business and lifestyle has exploded in popularity. Originating out of an ecosystem with a high concentration of successful technology companies in Silicon Valley (California), it is now spreading all over the world.
As the barriers to launch a startup disappear, the volume of new startups being formed daily is dramatically increasing. With access to technology (that can be commercialized) becoming easier, there are increasing variations of the types of startups that are forming. There is an infinite supply of problems for startups to tackle and disrupt and therefore, an infinite number of startups yet to be formed into the future of humanity.
As the volume of companies has increased, the amount of startup funding (supply) available hasn’t grown in the same ratio (demand). There is a massive gap of venture capital funding in cities all over the world, and there is a growing investment interest within Family Offices, Pension Funds, Corporate Funds etc. Recently released technologies and new investment vehicles (Special Purpose Vehicles) are making it easier for aspiring VC investors to launch funds.
It is a great time in history to start a VC fund and we hope to break down the entire process to help aspiring VC investors start, fund, operate, and exit successful VC funds.
What is a VC Fund?
Venture capital is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.*
Invention and innovation drive many world economies. What’s more, they have a powerful grip on the nation’s collective imagination. The popular press is filled with against-all-odds success stories of Silicon Valley entrepreneurs. In these sagas, the entrepreneur is the modern-day cowboy, roaming new industrial frontiers much the same way that earlier Americans explored the West. At his side stands the venture capitalist, a trail-wise sidekick ready to help the hero through all the tight spots — in exchange, of course, for a piece of the action.**
Stages of Launching a VC Fund
1. Identifying market gaps
2. Drafting a thesis
3. Creating fund prospectus deck
4. Forming a team
5. Sourcing LP Capital
6. Legalization of the fund
7. Deal flow sourcing
8. Securing investment commitments
9. Roundtable Due Diligence
10. Syndicates & Co-investors
11. First deal deployment
12. Carry responsibilities
13. Exit and investor payback
14. Fund II
Bonus 15. Portfolio Alumni
Since there is a lot of information to cover in each of the stages above, we will be creating an article for each of the stages listed above and releasing them in succession. To stay informed, make sure to subscribe to the StartupFuel blog on Medium and our YouTube channel at https://www.youtube.com/channel/UCKDhPYBuAQ78Lwwcbt_hqvQ.
Ashley Rahul Martis (Martis on LinkedIn)
Venture Capital Deal Flow Partner | Startup Valuation Expert | CBV Candidate | Founder @ StartupFuel.com | Deal Flow Partner @ Blue Vision Capital
Urjit Dave (Dave on LinkedIn)