The Anti-Playbook
· By Adeo Ressi · Insights
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.