In venture capital, publicly announcing a fund or pitching to limited partners that you do not know are considered General Solicitation, which is regulated in most countries. As a fund manager, it is important to know the local rules and regulations. To get started, here are some quick and practical some practical Dos and Dont’s.
How do you avoid General Solicitation?
VC Lab has compiled some best practices for pitching limited partners:
- Do have a pre-existing relationship with a potential limited partner before pitching them by, for example, waiting 30 days between a first meeting and the pitch
- Do have a substantive relationship with a potential limited partner before sharing fund materials by, for example, understanding their investment experience and sophistication
- Do pitch limited partners that you reasonably believe are wealthy with the means to lose the investment
- Do personalize messages to each potential limited partner versus sending mass emails
- Don’t make public statements, share fund information on social or issue press releases while fundraising
- Don’t have a public fund website with your investment thesis or with a contact link while fundraising
- Don’t speak at events, seminars, webinars or meetings where strangers are invited and where you talk about the fund Thesis or investments while fundraising
- Don’t reach out beyond your social, personal or professional network of close friends and colleagues
For more information, including a Q&A and specific tips on how to pitch limited partners without general solicitation, refer to this article.
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