In addition to creating your Investment Thesis and venture capital fund size, one of the most important and difficult things for a new venture firm manager to do is to select the focus of the fund.
What is the focus of a venture capital fund?
A venture capital fund will normally focus on three areas: (1) stage, (2) geography, and (3) industry or market. Some examples include:
Seed stage SaaS startups in Vietnam
Angel AgriTech startups in East Africa
Pre-seed HealthTech companies in Germany
As a general rule, the goal is to be as specific as possible with each of the focus areas while also ensuring that there are enough startups and capital for the fund to succeed. So, “Seed” is better than either “Early Stage” or “Pre-seed and Seed”.…
Category: Venture Capital Fund Formation
Once you have figured out the fund size and the focus of your venture capital firm, the hardest thing to do is to quantify your unique value proposition.
Or, as we like to call it at VC Lab, the “Secret Sauce”.
What is Secret Sauce for a venture capital fund?
The Secret Sauce of a fund describes why the managers are uniquely qualified to pursue the Thesis. The Secret Sauce provides a matter of fact statement of the competence of the managers with one or two pieces of supporting data. All of the data in the secret sauce must be from companies related to the Thesis, particularly the focus. Examples include:
– “…with a cumulative exit value of over $500 MM in the EdTech sector”
– “…helping three BioTech companies secure over $20 MM in sales each, including five deals with Fortune 500 accounts”
– “…providing startups exposure to our 25 member industry network, which has lead to 12 financings for $65 MM”
What are the top success metrics for a strong Secret Sauce?…