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