Launching a Venture Firm with VC Lab, by Adil Jafry

An overview of personal experiences in the VC Lab program, and how the program helps to launch a venture capital firm.

VC Lab allowed me to pull together all the necessary documents, resources, and systems required to start my venture firm

In Spring 2021, I found myself in the process of exploring the next leg of my professional career.

A couple of friends recommended I consider the VC Lab program, a highly engaging and rigorous hands-on program for aspiring venture capitalists headed by Adeo Ressi and Mike Suprovici, both experienced entrepreneurs and venture capitalists.

The last ten weeks have enabled me to develop a strong, focused fund thesis

So far it has been a commitment of +50 hours each week. The primary focus of the effort has been to get the presentation and the model right so that I can clearly articulate my unique approach and portfolio construction design to potential investors and the companies in which we plan to invest.

I plan to focus on investing in early stage companies in the cleantech and sustainability sectors in the US, and my mission is to support visionary entrepreneurs looking to transform how we harness and use energy in all walks of life.

Distilling an investment thesis and the sub-sectors within sustainability has been the central task

Combining that with a geographical focus and the value-add that my team brings (by investing in the portfolio companies and providing them support) has created a strong foundation for estimating a fund’s returns over its life — across various investment scenarios and fund outcomes.

Building an analytical framework that is specific to our thesis has been an important exercise, since venture investing follows a power curve law, where 1 or 2 investments within a successful firm’s portfolio generally return the entire fund and the requisite upside, while the rest of the companies in the portfolio barely break even.

This analytical framework serves as a guidepost for iterative future reflection, as each investment gains momentum to begin its journey towards growth and value accretion— or vanishes, as entrepreneurs pivot to spend their energies on other ideas.

It has been quite an eye-opening and an exciting experience for me

Also inextricably tied to this process has been the ever present guidance from VC Lab. Through weekly AMA (“Ask Me Anything”) sessions, I have learned about the optimal number of capital calls a fund should consider making, the fund’s expected life (and potential future extensions), the optimal investment period, the merits of making follow-on investments, and the intricacies of recycling management fees.

One topic that has universally been of concern to the international members of my cohort is the fund domicile and formation process — which varies by the country in which the fund is operating. Thankfully, I am domiciled in the US — where the regulatory framework is mature and well understood by the investor community.

While most of the members of my cohort are first-time fund managers, there are more than a handful who are already successfully managing VC funds and have joined the program to simply learn the “VC Lab way” of building and managing their future funds.

The weekly VC Lab webinars and AMAs have provided important cues on team development, deal warehousing, and trends in valuation and deal structuring

I am also planning to leverage VC Lab’s new “Fund In A Box” (FAB) offering, which can serve as a scalable mid- and back-office platform for my fund, supporting future capital calls and closings. FAB will also integrate with my LP and portfolio management systems.

With eight weeks left until my firm’s formal launch, I am now in the process of rounding out a strong team of qualified venture partners and advisors who share my passion for supporting visionary companies bringing transformative products and services to life that will help drive a sustainable future for our planet.

The free 16 week VC Lab program provides guidance, structure and a network to complete a fund closing in 6 months or less. Since mid 2020, VC Lab has helped launch 75 venture capital funds around the world.

Disclaimer: This post is not directed to any investors or potential investors, and does not constitute an offer to sell or a solicitation of an offer to buy any securities.

Read more from Adil Jafry on his Medium

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