Insights Accelerator Alumni

Meet the Funds from Cohort 5

Video and written synopsis of 5 managers sharing their experiences launching a fund in 2022.

Watch the full ‘Meet the Funds’ session below and read the key takeaways / learnings from the fund managers in Cohort 5.

VC Lab hosted a conversation about launching enduring venture capital firms with fund managers in Cohort 5 of the free venture accelerator. In this interactive session on the 13th of January, fund managers discussed their journeys to launching their VC firms and the fulfillment of inciting positive change at scale in their domains through their venture firms. The GPs also discussed their core driving theses and how VC Lab is helping to power the formation of their respective firms.


Key Takeaways

On launching a VC firm:

The panelists highlight their newfound international community at VC Lab. Launching a VC firm can initially be daunting; the Cohort 5 fund managers share the benefits of having a global set of peers to discuss their ventures, learn and share the journey with. 

They also share their experiences in working within a cohort structure and note the benefits of the peer support system when combined with expert guidance from the program. Important to note is the program carefully places firms in groups sorted by region and domain relevancy which can bolster fund formation efforts, especially in emerging markets and niche verticles.

On evaluating deal-flow:

Paolo emphasizes that deal-flow can be a part of your ‘secret sauce,’ which is a component of your thesis that highlights why you are the right person for launching your fund. Refer to VC Lab’s guide to learn ‘How to Determine Your Secret Sauce’ for more information. 

Some of our panelists such as Neeraj run accelerator programs based on their domain expertise. He explains that this helps them attract excellent deal flow in their region and enables them to evaluate the quality of deals. 

The GPs explain that to attract excellent deal flow, the fund managers may want to bring something of value to the table. They suggest that it does not necessarily have to be an MBA or vast sums of capital. For example, the panel agrees that you can invest your time with founders and look to leverage your network to add value too. 

On team-building:

Biola remarks on her journey to meeting her partner and suggests that teams in a VC fund work best when individuals’ skillsets and personalities complement each other. 

Additionally, the panel offers additional avenues and processes by which aspiring fund managers can meet like-minded individuals and potential partners. They suggest that those looking to launch a VC firm may want to be very active in their ecosystem by finding mentors, co-investing and attending demo days. They believe that by doing so you can gradually build your network in your ecosystem. 

Read more on building teams in venture capital. Refer to VC Lab’s guide on ‘How to Build a Venture Team’ for more information.

On going full time:

Venture capital is a long journey that requires a hefty commitment. Note that while the average marriage in the US lasts around eight years, most venture funds have a ten-year time horizon. Our panelists point out that when thinking about going full-time, new managers consider the long-term dedication the profession necessitates. 

They also highlight that potential LPs may have reservations about investing in new fund managers if they are not wholly committed to the firm. The panel points out that founders may also not look too keenly if fund managers are not allocating their entire schedule to the VC firm. They express that if this is the case when starting, you look to align your other activities with your fund thesis and make sure they are complementary to each other. 

On time commitments: 

Forming a fund takes a lot of time and mental fortitude; first, it may be best if you are prepared to commit the effort it takes to launch your fund. The VC Lab program assists general partners in securing capital commitments to complete a first close on a new venture capital fund, and as Nicolas points out, this initially requires at least 25 hours per week’s worth of work. 

Secondly, the panel suggests, with regard to your time commitments, it can be very beneficial to constantly strive to perfect your thesis and pitch, while taking in feedback from limited partners and the program. To do this well, our panelists think one has to be passionate about their cause and be prepared to commit help founders whenever they call. Furthermore, they state that having this passion is the foundation that can help you launch your fund and is something you can fall back on when you face obstacles. 

On the Mensarious Oath: 

The Mensarious Oath is an ethical code of conduct for venture capitalists and is pledged by all VC Lab attendees. Our panelist Silvia, an impact investor and vocal champion for women and Latino entrepreneurs, explains that she was drawn to VC Lab and the ‘Mensarious Oath’ due to an alignment in values. 

She also states that impact and return on investment are not necessarily mutually exclusive. Silvia highlights that her fund’s thesis is in line with the Mensarious Oath and she has always sought to activate her and other women’s capital to drive the change she wants to see in the world. She emphasizes that women investors are statistically twice as likely to invest in women entrepreneurs and outlines her desire to make positive changes by giving more women access to capital. 

On sourcing ethical capital: 

VC Lab is a vocal advocate for transparency within VC, as are the fund managers in our accelerator program. The panelists highlight the importance of value alignment when picking LPs for VC funds. They note that can be important to ensure that LPs uphold the values and mission of the firm and entrepreneurs they invest in. To lay the groundwork for a fruitful long-term relationship, fund managers and entrepreneurs may want to be ready to have conversations on the alignment of values with limited partners.

It can be beneficial for fund managers to appreciate the long-term nature of venture capital when launching their funds and partnering with LPs. Taking prudent steps to ensure capital from LPs is ‘ethical’ can help convey the values, mission, and brand of the VC firm in the long run. 

VC Lab runs Genesis, the four-month accelerator for venture capital firms and venture builders.

Cohort 8 starts in June and will help participants from around the world close on capital and start investing by October of 2022.

Learn more and apply here

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