LP Scaffold

The LP Scaffold is an outline on how a manager will reach the target fund size. It groups limited partners by archetype, estimates the target number that will participate, and then projects the total invested.

Managers commonly use an LP Scaffold to plan how they will close the entire fund. 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.

LP Scaffold Example

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 $2.0 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 $3.0 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 $3.0 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: 16 for $1.8 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.

$50K LPs: 4 for $0.2 MM

• Advisors: Strategic individuals that can bring both connections and other value add to the fund and the firm besides just money.
• Experts: Domain experts that have knowledge in the Fund Thesis and are willing to help with strategic inquiries.
• Founders & Ecosystem Leaders: Prominent members of the community locally or regionally that will help the firm brand to have involved.