Emerging managers are not immune from making rookie mistakes. We complied a list of the most common blunders.

Enjoy!

1. STRUCTURE & FORMATION BLUNDERS

🔥 DIY Legal/Compliance/Accounting: Because who needs professionals when you’ve got Google and determination? (FYI: You needed professionals.)

💸 Premature Vendor Commitments: Signing contracts with service providers before having actual commitments, like buying wedding decorations before having a partner.

📢 506(c) Violations: Accidentally doing general solicitation through overeager website copy and newsletters, turning your private fund into an unwanted public spectacle.

🤝 Using Friend-Vendors: Hiring your lawyer or accountant friends because they’ll “give you a deal” – spoiler alert: expertise in fund management isn’t typically learned in general practice.

2. CAPITAL MANAGEMENT MISHAPS

💰 The All-In Call: Calling 100% of capital immediately because patience is overrated and money burns so nicely in your pocket.

⏰ Timing Troubles: Either waiting until the heat death of the universe for first close or rushing it before having enough commitments to make it worthwhile.

🏃 Catch-Up Chaos: Forcing later LPs to play an expensive game of catch-up with 50-75% contributions because early capital calls weren’t properly planned.

🎭 Creative Capital Schedules: Having different LPs on various capital call schedules, because who doesn’t love unnecessary complexity?

3. LP RELATIONSHIP DISASTERS

🎪 LPAC Amateur Hour: Adding massive institutional investors to the LPAC instead of friendly faces who won’t make your life difficult.

🎮 ManCo Mayhem: Letting large LPs into the management company, effectively giving away the keys to your kingdom.

📜 Side Letter Syndrome: Accepting obscure or absurd side letters that turn your simple fund into a choose-your-own-adventure novel.

🎯 Mismatched LP Targeting: Chasing elephants (large institutions) when you should be hunting deer (family offices), or vice versa.

4. INVESTMENT STRATEGY SNAFUS

🧭 Thesis-What-Now?: Operating without a clear investment thesis, like trying to navigate with a broken compass and a blindfold.

🌱 GP-Thesis Mismatch: Having a thesis that doesn’t align with the GP’s experience, like a vegetarian running a steakhouse.

📝 Non-Standard SAFE Chaos: Creating bespoke agreements when standard templates exist, because reinventing the wheel is fun.

🎨 Valuation Vagueness: Having unclear or questionable valuation policies, making your mark-ups look more like modern art than finance.

5.DEAL EXECUTION ERRORS

🎪 Out-of-Thesis Wandering: Making early investments that don’t fit your thesis because FOMO is a powerful drug.

📊 Cap Table Confusion: Investing in companies with uninvestible cap tables or missing live versions for calculation verification.

🔍 Diligence Deficiency: Inadequate due diligence on venture scale potential, GTM, or team issues because who needs research when you have gut feelings?

⚠️ Toxic Term Acceptance: Agreeing to problematic provisions in term sheets, SPAs, or convertible notes because reading is hard and FOMO is easy.

FINAL THOUGHT

Remember: Every mistake here has been made by someone who thought they were too smart to make it. Don’t be that someone.

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