Accelerator Alumni Insights

Launching a Venture Firm with VC Lab, by Adil Jafry

About the Author

This article was written by Adil Jafry, who is participating in the 4th cohort of VC Lab. Adil is an experienced entrepreneur, who is passionate about space exploration, and he has further expertise in energy, investment banking and general management. Notably, after interning at NASA, he co-founded Chandah Space Technologies.

VC Lab allowed me to pull together all the necessary documents, resources, and systems required to start my venture firm

In Spring 2021, I found myself in the process of exploring the next leg of my professional career.

A couple of friends recommended I consider the VC Lab program, a highly engaging and rigorous hands-on program for aspiring venture capitalists headed by Adeo Ressi and Mike Suprovici, both experienced entrepreneurs and venture capitalists.

The last ten weeks have enabled me to develop a strong, focused fund thesis

So far it has been a commitment of +50 hours each week. The primary focus of the effort has been to get the presentation and the model right so that I can clearly articulate my unique approach and portfolio construction design to potential investors and the companies in which we plan to invest.

I plan to focus on investing in early stage companies in the cleantech and sustainability sectors in the US, and my mission is to support visionary entrepreneurs looking to transform how we harness and use energy in all walks of life.

Distilling an investment thesis and the sub-sectors within sustainability has been the central task

Combining that with a geographical focus and the value-add that my team brings (by investing in the portfolio companies and providing them support) has created a strong foundation for estimating a fund’s returns over its life — across various investment scenarios and fund outcomes.

Building an analytical framework that is specific to our thesis has been an important exercise, since venture investing follows a power curve law, where 1 or 2 investments within a successful firm’s portfolio generally return the entire fund and the requisite upside, while the rest of the companies in the portfolio barely break even.

This analytical framework serves as a guidepost for iterative future reflection, as each investment gains momentum to begin its journey towards growth and value accretion— or vanishes, as entrepreneurs pivot to spend their energies on other ideas.

It has been quite an eye-opening and an exciting experience for me

Also inextricably tied to this process has been the ever present guidance from VC Lab. Through weekly AMA (“Ask Me Anything”) sessions, I have learned about the optimal number of capital calls a fund should consider making, the fund’s expected life (and potential future extensions), the optimal investment period, the merits of making follow-on investments, and the intricacies of recycling management fees.

One topic that has universally been of concern to the international members of my cohort is the fund domicile and formation process — which varies by the country in which the fund is operating. Thankfully, I am domiciled in the US — where the regulatory framework is mature and well understood by the investor community.

While most of the members of my cohort are first-time fund managers, there are more than a handful who are already successfully managing VC funds and have joined the program to simply learn the “VC Lab way” of building and managing their future funds.

The weekly VC Lab webinars and AMAs have provided important cues on team development, deal warehousing, and trends in valuation and deal structuring

I am also planning to leverage VC Lab’s new “Fund In A Box” (FAB) offering, which can serve as a scalable mid- and back-office platform for my fund, supporting future capital calls and closings. FAB will also integrate with my LP and portfolio management systems.

With eight weeks left until my firm’s formal launch, I am now in the process of rounding out a strong team of qualified venture partners and advisors who share my passion for supporting visionary companies bringing transformative products and services to life that will help drive a sustainable future for our planet.

The free 16 week VC Lab program provides guidance, structure and a network to complete a fund closing in 6 months or less. Since mid 2020, VC Lab has helped launch 75 venture capital funds around the world.

Disclaimer: This post is not directed to any investors or potential investors, and does not constitute an offer to sell or a solicitation of an offer to buy any securities.

Read more from Adil Jafry on his Medium

Accelerator Alumni Insights

XY Ventures: Interview with Simon Olson

Watch the interview with Simon Olson, alumni of VC Lab and the founder & managing partner of XY Ventures, a seed-stage fund that bridges the Nordics and Silicon Valley startup ecosystems. 

On Simon.

I have an entrepreneurial background.

At MIT, as part of an accelerator program, we raised some venture capital and worked on our startup Y-Box. After that experience, I ended up working with a big IT company in the Nordics called TietoEVRY. Heading up the ‘Innovation Studio’ and later on the ‘Ideation and AI’ program I was looking for “the next big thing“. From there, through my network and accelerators, I took on a lot of pro bono work in the Nordics and in the States. That eventually led me to the opportunity to join VC Lab, after I was invited to apply.

On XY Ventures.

We build a connection between the Bay Area and the Nordic region, enabling strategic bilateral relations between two of the most unicorn dense ecosystems in the world.

XY Ventures is a seed stage venture capital firm. Typically we work with accelerators in the Bay Area, where either myself or one of my partners have a relationship in mentoring startups that have a connection to the Nordics. This way we can work with founders very early on. It matches well with our investment thesis, which is to focus on digital disruptors.

On Founders.

The biggest thing for us is grit.

We look for people who give themselves no other alternative other than to succeed. For example, in the Nordics founders typically work on their startup as a side job until receiving venture capital. We prefer to work with founders who have already made the jump to running their startups full time. We don’t tend to invest pre-product startups.

On Innovation.

AI backed, manufacturing automation and fintech fraud detection

With my experience and interest in DeepTech, one application of AI that interest me is automation within manufacturing, which is an area where I have some experience. Another exciting use case of AI is fraud detection within financial services / FinTech, which has been a key area where a lot of the innovation has come from the Nordic region.

On Sweden.

There are a lot more people who want to become entrepreneurs compared to 10 years ago.

The ecosystem in Sweden is really exciting. Traditionally the community has been really tight-knit and a lot of the entrepreneurs know the VCs and vice-versa. We are now seeing a new wave of impact focused entrepreneurs coming into the scene and I think that is really exciting.

On the flip side, the VC scene is also very interesting in Stockholm. A lot of the VCs here come from a private equity background as opposed to ex-entrepreneurs. You can see it in the Series A venture rounds here where most are backed by P.E. firms / individuals within VC funds with that background. Notably, there aren’t that many seed funds in the region. At the same time we have a lot of accelerator programmes focusing on the ‘ideation’ phase. So it makes it really interesting to be a VC between this gap unfolding int the market.

On Being a New Manager.

The hardest thing hands down has been fundraising.

A lot of the LPs in this region expect emerging fund managers to have a private equity background and experience in the financing side rather than the company building aspect. It has been an uphill battle to explain to some LPs how that aspect works and that we aren’t just buying lottery tickets.

Secondly, building a team that is passionate and believes in the mission can be challenging , especially when you are a new fund manager and are relatively less known. Right now we have 8 people in our team. It takes time to build relationships and trust as a new manager.

On the Plan.

We’re aligning ourselves for the final close.

Since graduating, we’ve built a team which includes some senior members with private equity backgrounds. We have one more person to on board before the final closing.

I’m still on the lookout for more people who believe in our thesis of bridging Silicon Valley and the Nordics. We’re keeping our heads down until our final close at which time we will start thinking about our second fund and build up the network to close for that fund.

I wouldn’t say that this was even in my dreams about a year ago. It has been a roller-coaster of a ride in a good sense. We are thrilled to be working with VC Lab in our journey.

Accelerator Alumni Insights

Meet VC Lab Alumni in July of 2021

Alumni of the VC Lab accelerator have raised over $100 MM, and are building innovative new venture funds across the globe. On July 8, 2021, VC Lab hosted a live ‘Meet the Funds’ online event, where 250+ attendees heard directly from the new managers that built their funds in the accelerator. Participating GP panelists included: 

  • Brittany Barreto, Ph.D., Co-Founding General Partner of Coyote Ventures (VC Lab Cohort 3): Coyote Ventures is a $10M Seed-stage venture fund in the US to invest in companies innovating in women’s health and wellness, founded by General Partners who are scientists and industry experts, and supporting founders leveraging our thousand-plus member network and media platform FemTech Focus.
  • Sidney Nakahodo, Founder & General Partner of Seldor Capital (VC Lab Cohort 2): Seldor Capital is a pre-seed fund based in New York City that invests in startups in the U.S. working with Space technologies and their applications.
  • Isabel Starck and Bryan Duarte, Co-Founders of BlackTech Capital (VC Lab Cohort 3): By focusing on Black Entrepreneurs in CleanTech, our impact is at the intersection of social responsibility and environmental initiatives.

You can watch the full-length webinar video here​, or see the reviews and highlights below to learn about the experiences of these new managers who built their funds through the VC Lab program:

Journey to Launching a Space Tech fund in VC Lab
Journey to Launching Minority Founder-Focused CleanTech fund in VC Lab
New Fund Manager Inspiration for Female GPs: Coyote Ventures
Surprises in Launching a New VC Fund + VC Lab Program Testimonial
VC Lab ‘Tactical’ Program Benefits & Frameworks for Fundraising
New Fund Manager Insights on Rejection & Fundraising Realities
New Fund Manager Inspiration: ‘Taking the Jump’ & ‘Remembering Your Why’
On Challenges for Women & Minorities Entering VC & Raising First Fund