Approaching Institutional LPs as an Emerging Manager

Venture Trailblazers, October 1, 2026. Adeo Ressi in conversation with Charles Hudson, founder of Precursor Ventures.

On October 1, Adeo Ressi sat down with Charles Hudson for Venture Trailblazers, the VC Lab series where investors who built their firms their own way talk through how they actually did it. 1,046 people registered for the session, and we still finished the hour with more than 100 questions left in the Q&A.

Charles has raised five funds and about a quarter of a billion dollars at Precursor Ventures. He has never let a single fund get above $100 million, he runs the firm with no investment committee, and he writes the first check into 80 to 100 companies per fund, usually before there is a product to look at. Over the hour he and Adeo covered how he named the firm, how he sizes funds, how he decides, what he looks for in a founder when there is no data, what the Cursor round did to pre-seed pricing, and what 1999 taught him about this AI cycle.

Watch the full conversation here: Charles Hudson on Venture Trailblazers, the complete session.

This piece is about the LP questions from the Q&A: how to approach institutional allocators, whether your industry background actually justifies a fund, and how to tell if Fund I worked.

The short version

• Allocators get flooded with cold outreach the same way VCs do. A warm introduction is worth more than a better email.
• Pitching a $10 billion pension fund on a $10 million fund signals that you do not understand their constraints.
• Industry expertise only justifies a fund if that expertise is still scarce. Most of the obvious themes are no longer scarce.
• You cannot tell whether Fund I worked at the end of Fund I. Pre-seed takes 12 to 13 years to liquidity.

On cold outreach to allocators

Two questions from the Q&A got at the same problem. How do you get institutional money, and should you even be starting a fund right now?

Charles started with the thing most managers get wrong about allocators, which is imagining them as a different species.

"A lot of them are like VCs. Their inboxes are flooded with cold stuff. If you can find a way to get a warm intro from someone who knows them, great."

The useful reframe is to treat LP fundraising with the same respect you would want a founder to show your own inbox. You would not expect a cold email to win a term sheet from a top seed fund. The same arithmetic applies in the other direction. A single credible introduction from an existing LP, a fellow GP they already back, a placement contact or a service provider they trust will outperform a hundred well-written cold emails.

On targeting, which is where most first-time managers go wrong

Here Charles was sharper, and this is the line worth repeating to anyone building an LP list.

"If you want to meet with somebody at a gigantic pension fund and you’re raising a $10 million seed fund, you probably are signaling that you don’t understand that person’s world."

Large allocators have programmatic minimums and model constraints that make small commitments hard even when the person on the other side likes you and genuinely wants to do it. Adeo added the practical version on the call: they would have to jump through massive hoops to get a small check approved.

So the mismatch is not a soft no that persistence can overcome. It is structural. And sending the pitch anyway tells them something about your judgment, which is the one thing they are actually evaluating in a first-time manager.

What to do instead, in rough order of how early you should work it:

• Fund I: people who know you. Operators, founders, executives and family offices who can write $100,000 to $1 million and decide for themselves.
• Fund I and II: small institutions and emerging manager programs. Groups whose minimum check fits your fund size and whose mandate is specifically to back new firms.
• Fund II and III: funds of funds and foundations. They need a real track record and they need your fund to be large enough to absorb their minimum.
• Later: large pensions, endowments and sovereign allocators. Build the relationship early if you can, but understand you are introducing yourself for Fund IV, not selling Fund I.

Knowing which bucket you are in and saying so out loud is itself a credibility signal. Charles made that point implicitly: the manager who says "you cannot write a check this small today, I am introducing myself for later" is demonstrating exactly the judgment that gets them a meeting in three years.

On whether your background justifies a fund

A manager asked what to do with deep industry expertise but no venture experience. Charles’s test is whether the expertise is actually scarce right now.

"I have a bunch of friends who started AI-focused VC firms ten years ago, before AI investing was a mainstream multi-stage focal theme. So they saw stuff, because that theme was not popular and not well understood. If you today said, hey, I’m starting an AI-focused VC fund, people would say, you and everybody else."

His example of where the edge still existed recently was physical AI and robotics about seven years ago, before the attention arrived.

Then the test itself, which is worth answering honestly before you write a deck:

"Is the expertise you have from your industry experience actually novel and unique, and does it give you an edge, or is it widely available? And if it’s widely available, I would think hard about whether you should start a fund."

Three practical ways to check your own answer:

• Count the competitors. If you can name ten funds with your positioning, your expertise is not the edge. Something else has to be.
• Name the deals only you see. Not deals you would like to see. Deals that come to you because of who you are, with specific names attached.
• Ask what you know that the market has priced wrong. An edge is a disagreement, not a credential.

On whether Fund I worked

A manager asked what return makes a fund a success, and when you know it is time to raise Fund II. Adeo answered first and Charles agreed with him. At the end of Fund I you do not know yet, and you will not know for years. Pre-seed takes 12 to 13 years to get to liquidity.

Charles has lived that timeline. Precursor has had real exits, The Athletic to the New York Times, Passport Shipping to Global-e, DroneDeploy to Procore for around $850 million, and Elroy Air heading toward the public markets. Five funds in, he was still matter of fact that the best outcomes have not landed yet.

So the question you can answer early is a different one. Do you want to keep doing this? Markers you can read in the first few years:

• Are good founders choosing you when they have other options?
• Are your companies raising their next rounds from investors you respect?
• Would your existing LPs back you again, and have you asked them plainly?
• Do you still want to be doing this work in ten years, because that is the actual commitment?

Which brings it back to what Charles said about starting Precursor in the first place:

"Many people who care about you and look out for you will tell you this is a terrible idea. You should stay at your comfortable, cushy, safe job."

Frequently asked questions

Should an emerging manager pitch large pension funds? Not for a small Fund I. Their minimum check sizes and approval processes make it structurally difficult, and pitching anyway signals you do not understand their constraints.

How do you get warm introductions to LPs? Through existing LPs, other GPs they already back, and service providers in their orbit. Charles treats the warm path as the only reliable one.

Is industry expertise enough to raise a fund? Only if it is scarce. If ten other funds claim the same positioning, you need a different edge.

When should you raise Fund II? Before you know whether Fund I worked, because the timeline is 12 to 13 years. The decision rests on momentum, LP conviction and your own appetite rather than realized returns.

Watch the full session

Everything above comes from the hour Charles spent with Adeo on October 1. You can watch the complete conversation here, and the rest of the Venture Trailblazers series is on the VC Lab YouTube channel.

Want the whole session in one place? Charles Hudson’s advice for emerging fund managers is the full recap, with a timestamped index of every topic.

Launch your own fund with VC Lab

VC Lab is a free program that takes you from a thesis to a deployed Fund I, with the legal, LP and operating work handled alongside you. The managers who come through it are the people asking Charles questions like these in the first place.

Apply to VC Lab, or start at govclab.com.