Venture Institute

Sourcing and Closing Limited Partners

Understanding how venture capitalists find and close LPs

Securing Limited Partners is a formidable task that demands persistence, meticulous research, and strategic networking. For the average fund, this means courting nearly 250 LP prospects and pitching to a majority of them, only to culminate in a select few actual commitments. This article elucidates the exhaustive process, underscoring the challenges and providing a roadmap to effectively source and close LPs in the investment realm.

Researching LPs

Sourcing potential Limited Partners necessitates the usage of multiple research platforms. These platforms, whether digital tools or networks, provide data and insights about potential LPs, their investment behaviors, and affiliations.

  • LinkedIn: A hub for professionals, it can identify LPs by job titles, backgrounds, and company affiliations.
  • CrunchBase: This platform offers insights into businesses and their associated stakeholders, ideal for locating previous investors.
  • AngelList: Geared towards startups, it provides data on venture capitalists and angel investors.
  • Professional Networks: Industry-specific groups or associations can have directories to identify potential LPs.
  • Alumni Networks: Educational affiliations can reveal potential LPs, as many alumni invest in ventures related to their alma mater.
  • Coworkers: Past and current colleagues can offer introductions or insights on potential LPs.
  • Web Searching: General internet searches using specific keywords can lead to potential LPs or their affiliations.

Incorporating a variety of these platforms into a research strategy can enhance the depth and breadth of potential LP discovery, creating a solid foundation for the engagement process.

Keywords for LPs

Researching LPs is difficult. Most do not self identify, and there are fake LPs, seeking attention and opportunities, as well as inactive LPs. 

Identifying real LPs requires searching with a combination of less obvious keywords, such as “Multi-Family Office Chief Investment Officer”, on LInkedIn, and then carefully filtering the results by individually researching each person. Many don’t invest in VC. Looking at what Boards they serve on, their interests, or their investments are obvious signals, but some of the largest LPs are mostly silent online. 1 in 20 in a well formatted search might actually be a LP due to the high level of noise.

Here are some keywords to use in different categories to start searching for LPs:

Job Title

  • Chief Investment Officer
  • Investment Director
  • Institutional Investor
  • Angel
  • Venture Partner
  • Exited Entrepreneur


  • Private Equity
  • Angel Investing
  • Private Investing

Company Description

  • Investment Firm
  • Family Office
  • Fund of Funds
  • Endowment Fund
  • Hedge Fund
  • UHNW (Ultra High Net Worth)
  • Acquired

Connectors to LPs

Connectors are individuals or entities that are 1st degree connections of the manager who have strong 1st degree connections to Limited Partners. They bridge the gap between managers and potential LPs, making trusted introductions to potential LPs.

To identify Connectors,  managers review friends, alumni, past colleagues, industry acquaintances, or professionals met at conferences. Use LinkedIn to see if they have 1st degree connections to any Limited Partners on the LP target list.

For Connectors with strong relationships with target LPs, managers set up a meeting. The goal of the meeting is to catch up and share what each party is working on, including the fund. If the meeting is going well, the manager asks if the Connector is open to helping to make any introductions, and the manager also offers to help the Connector with anything.

Connector Best Practices

Connectors play a vital role in fundraising for venture capital funds. Here are some best practices:

  • Offer to Help: Help a Connector with something that they need first to demonstrate that it is a mutually helpful relationship
  • Keep Up-to-Date: Inform the Connector of the status of any introductions so that they can help close
  • Measure Success: Track which Connectors are generating the most referrals and closes for deeper engagement
  • Send a Newsletter: Keep Connectors on the monthly newsletter so that they know more about the fund
  • Check in Quarterly: Organize a short check-in call quarterly with the best Connectors to find new leads
  • Invite to Events: Invite the strongest Connectors to LP events and other industry functions

General Solicitation Considerations

In many countries around the world, managers are prevented from soliciting investment from people that they do not know and from people that are not wealthy. It is important that the manager understands the general solicitation rules and helps the Connector follow the rules, as well. To this end, the Connector can introduce the manager individually without mentioning the fund.

Compensating Connectors

Compensation should avoid triggering broker-dealer regulations. GPs shouldn’t offer, nor should Connectors seek, a percentage of capital raised. Alternative compensations can include dinners, business assistance, prioritizing introductions, or considering them for a venture partner role, provided it’s not tied to capital raised.

LP Construction

Venture funds usually employ a phased approach when securing commitments from Limited Partners. The First Close often captures between 10% to 25% of the target fund size. 

Funds attract smaller investors at first that are normally close to the managers, followed by larger investors later on after the fund has operationalized. This is, in part, a de-risking strategy by larger LPs, and it also often takes larger LPs more time to close. 

Managers are advised to set up a fund closing model with targets that include monetary goals and LP Archetypes. Using the example of a $10 million fund, the fund closing model might look like this:

$1 MM LPs: 2 for $2 MM

  • Family Offices: These firms represent wealthy families and invest to both preserve and grow the family’s wealth, often having access to significant resources.
  • Fund of Funds: Investment firms that focus on backing other funds, offering access to a broad range of startups and industries, and providing resources and expertise to the funds they invest in.
  • Corporate Venture Capital (CVC): Corporate entities looking to invest in emerging trends and technologies, bringing industry expertise and significant resources.

$500K LPs: 6 for $3 MM

  • Exited Founders: Entrepreneurs who have previously built and successfully exited businesses, bringing with them vast experience and potentially beneficial connections.
  • Tech Executives: Individuals at the forefront of technological advancements, bringing industry insights and a deep-rooted network.
  • Next Generation Wealth: Younger individuals from wealthy lineages aiming to carve their own investment legacy, potentially leveraging their family’s resources and connections

$250K LPs: 12 for $3 MM

  • High Net Worth Individuals (HNWIs): Wealthy individuals seeking diversification and possibly harboring a personal interest in sectors the fund might target.
  • Bankers: Those from the financial sector, potentially offering a robust understanding of finance and a vast network.
  • Venture Capital Firms: Larger VC firms may participate, especially if the new fund offers a unique access to trusted dealflow.

$100K LPs: 20 for $2 MM

  • Personal Friends: Investing based on deep trust and belief in the general partner’s acumen and potential.
  • Alumni Networks/Affinity Networks: Professionals united by common educational or professional backgrounds, offering shared values and a myriad of connections.
  • Angel Investors: Well-to-do individuals seasoned in backing startups, and who might be looking to diversify through a venture fund.

LP Closing Process

Closing a Limited Partner involves a number of steps and can often take multiple months, sometimes even years. A rough outline of the closing process is below:

  1. Source the LP: Conduct basic research around likely LP Archetypes to find a list of 150 to 500 Limited Partners to target for a full fund closing. This sourcing is an ongoing process over months during the full fund closing.
  2. Meet with the Connector: Arrange a meeting with your identified Connector. In this meeting, discuss what you are working on and ask if the Connector can help identify any LPs, sharing the names from your research.
  3. Secure an Introduction: If the Connector believes a suitable LP is in their network, ask them to facilitate an introduction. Ensure this introduction focuses on you or your team rather than directly mentioning the fund or Thesis.
  4. Hold an Initial Meeting: After a successful introduction, set up a meeting with the potential LP. This meeting aims to build rapport and establish a relationship before pitching to comply with general solicitation rules..
  5. Hold Pitch Meetings: Once a relationship is established and the LP is qualified, organize pitch meetings to present the fund. In this meeting or meetings, describe the Thesis with your value add and address any questions.
  6. Provide Materials: It’s likely that the LP will request further information or documentation either before or after the meetings. It is recommended that the manager secure a non binding commitment letter, a PACT, before sending materials.
  7. Secure a PACT Commitment: When an LP expresses interest, requests materials, asks for Data Room access, or seeks multiple meetings, the manager asks the LP to sign a PACT to indicate their investment interest. This “hard circles” the LP as a serious investor.
  8. Respond to Due Diligence: Larger and more serious LPs will complete due diligence and review the fund Data Room, which includes fund materials, legal agreements, portfolio company information, team biographies, and references.
  9. Complete a Legal Review: Lawyers from the LP will review the LPA and may ask for a Side Letter to secure special terms. The manager normally coordinates the answers to legal questions and negotiates against any special terms.
  10. Sign the Agreements: Once the questions are resolved and any special terms are negotiated away, the manager sends the LPA to the LP for signature. Depending on the LPA, the Subscription Agreement and LPA may be hundreds of pages and complex to sign, taking days.
  11. Complete a Capital Call: After signing, the LP is sent a Capital Call to send in a percentage of their commitment that catches them up to the level of all other LPs in the fund. It is normal for managers to call 20% or 25% on first closing.


A common LP scenario in venture capital is called “LP Love.” This term captures the tendency of some Limited Partners to engage fund managers extensively, consuming substantial amounts of their time without ever saying “yes” or “no.” While LP Love can be a genuine drain on resources, it is one of several setbacks in the LP closing process.

  • Seasonality: Investment cycles and fiscal year-ends can influence LP decisions. For instance, an LP might delay decisions due to vacations or a forthcoming budget.
  • Changing Market Conditions: Sudden market volatilities or economic downturns can prompt LPs to reconsider their investment strategies, pushing commitments to the future.
  • Shifting Industry Trends: Evolving trends in the industry can divert an LP’s focus. A surge in a new technology or a decline in a particular sector’s prospects influence LP decisions.
  • Internal Problems: Challenges within the LP’s organization, such as leadership changes or strategic overhauls, can stall or terminate potential investments.
  • Liquidity Setbacks: Even if an LP is interested, they might face capital constraints or other liquidity issues that prevent them from committing.

Recognizing these potential setbacks early can equip fund managers with strategies to navigate them, ensuring smoother LP engagements and mitigating prolonged periods of uncertainty.

LP Rejections  

LPs rarely say, “no,” but they do say things that tell you their answer is a “no.” In venture, anything that is not a “yes” is a “no,” and here are some examples of things that LPs say which effectively mean, “no”:

  • Delayed Response: After multiple follow-ups, the LP might remark, “I’ve been swamped lately and haven’t had a chance to review.”
  • Resource Constraints: They might mention, “We are currently overallocated in venture, and I will let you know when this changes.”
  • Alternative Investments: The LP could note, “We’re currently exploring some other opportunities that align closely with our focus.”
  • Strategic Shifts: A common indication is, “Our investment focus is undergoing some changes right now.”
  • Seeking More Data: By saying, “Can you provide more detailed projections?”, the LP might be stalling the decision.
  • Concern Over Team: A subtle hint could be, “How experienced is your management team with ventures of this scale?”
  • Market Concerns: An LP might remark, “The market seems quite saturated; how do you plan to differentiate?”
  • Return Potential: Expressing concerns like, “The projected returns seem optimistic given the risks,” indicates hesitancy.
  • Fit with Portfolio: An LP might say, “We typically invest in different sectors or stages.”
  • External Advisors: They could note, “Our advisors have raised some concerns that we need to address.”

Recognizing these indirect refusals early can help in redirecting efforts and refining the approach for future interactions.


Navigating the labyrinthine journey of sourcing and closing LPs is undeniably challenging and time-consuming. A blend of robust research, relationship management, and an unwavering commitment can aid fund managers in surmounting these hurdles. Through awareness of potential setbacks and the understanding of nuanced rejections, managers can refine their strategies, making their endeavors more fruitful and efficient in the long run.