LP fundraising is a sales motion. Treat it like one.
Why This Matters (Even Before You Launch a Fund)
Whether you plan to launch a fund or get hired in venture capital, your ability to engage with capital is increasingly valuable. As AI compresses traditional analyst work, humans differentiate through relationship-building, judgment, closing behavior, and credibility in a market.
Understanding how LP fundraising works, even if you’re years away from launching a fund, gives you structural advantages:
You start building your LP pipeline and relationships
You understand what fund managers are optimizing for
You can contribute meaningfully to LP conversations at firms where you work
You develop the pipeline discipline that translates to deal sourcing
This builds directly on the foundational concepts from earlier articles.…
Category: Venture Institute
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The Dawn Of The Specialists
The year 2025 marked a continued evolution in the venture capital landscape, with emerging managers playing an increasingly prominent role. Building on patterns identified in 2024, this year saw further shifts in who is launching funds, how those funds are structured, and what strategies are proving most effective in early-stage investing.
With one of the largest and most representative samples of emerging VCs globally, this report analyzes over 850 funds launched through Decile Group’s VC Lab accelerator, offering a unique window into the emerging manager segment. Findings highlight new trends across demographics, fund models, and fundraising execution, many of which signal deeper structural changes in how venture capital is accessed and grown.…
The highest-leverage role you can play, even before you have a fund
Why Connection Is a Venture Skill
In venture capital, relationships are infrastructure. The best investors move information, opportunities, and trust between the right people at the right time. This creates a structural advantage that compounds over the years.
For aspiring VCs, becoming a strong connector is one of the fastest ways to build a network and a credible edge because it creates measurable outcomes:
Founders get introductions that help their startups grow
Investors get deals that fit their thesis
LPs get access to the VC asset class through relevant managers
You become known as a high-signal node in a specific ecosystem
This connects directly to the foundational concepts covered in the earlier articles.…
Demo Day Intro
For up-and-coming VCs, doing real deal scouting is very difficult. Without an established investment track record, their dealflow is considered unqualified and few VCs or Limited Partners (LPs) will pay attention to their dealflow.
Venture Institute offers participants a chance to overcome that barrier through Demo Day.
What is Demo Day
Demo Day is an optional deal scouting exercise where Venture Institute participants present real, founder-consented fundraising deals to a curated group of active VC firms. It is designed to highlight Venture Institute participants’ ability to source strong opportunities and communicate them at a professional standard.
Demo Day is a live session where selected Venture Institute participants briefly present a startup and take Q&A from a panel of investing VCs.…
A self-assessment framework to identify your starting point, plus a deep dive on the fastest paths to credible edge
Start With an Honest Audit
Before you can build secret sauce, you need to know where you’re starting from. Most aspiring VCs skip this step and jump straight into activity: attending events, taking coffee meetings, reading newsletters. Then they wonder why, two years later, they still can’t articulate a credible edge.
The Secret Sauce Audit forces you to confront reality.
Your Background Inventory
What industries have you worked in? For how long? At what level? What founders, operators, or executives do you already know, and in which sectors? What communities or ecosystems are you already embedded in? Have you made any angel investments, and what were the outcomes?…
In venture capital, the investment thesis is foundational. Whether you intend to raise a fund or build a career in venture, your thesis is a clear and concise statement which defines what you invest in and why you are the best person to do it. It is the basis for how you source opportunities, how you are perceived by founders, other investors and Limited Partners. In other words, your investment thesis will tell you where you should invest your limited time and attention.
What Is an Investment Thesis?
At its core, an investment thesis explains:
What your investment focus is (sector / geography / stage)
Why you are uniquely positioned to invest in that successfully
That positioning might come from expertise, network, experience, or data — but it must be grounded in credibility rather than preference or curiosity.…
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2024 Emerging Manager Report Reveals Industry Transformation
The venture capital industry is undergoing a seismic shift, and it’s not just about the money anymore. Our analysis of over 850 new fund managers in 2024 – representing approximately half of all VC firms launched worldwide – reveals a striking transformation in who gets to write the checks.
Gone are the days when venture capital was exclusively the domain of seasoned finance professionals from traditional backgrounds. Today’s emerging managers are younger (46% under 40), more diverse (27% women and non-binary), and increasingly likely to come from outside the industry (48.8% transitioning from other sectors). But perhaps most surprisingly, the data suggests that these new entrants aren’t just changing the face of venture capital – they’re rewriting its playbook entirely.…
Venture capital firms function as boutique investment firms with a focus on early-stage investments. Every role within these small businesses has its specific responsibilities, ranging from sourcing investments to fundraising.
While traditional roles in venture capital have been stereotyped, contemporary programs like VC Lab are redefining these perceptions. They’re breaking the mold, reshaping roles, and driving evolution within the venture capital industry.
Managing Partner
The Managing Partner sits at the helm of the venture capital firm. They lead the strategic vision and overall operations of the company. They play a pivotal role in shaping the investment portfolio and fundraising for the firm.
Traditionally, Managing Partners direct the long-term strategy of the firm and oversee multiple funds with different investment strategies. They interact with Limited Partners and make final investment decisions, sharing the same responsibilities as Partners.…
Venture capital firms navigate complex dynamics with several stakeholders to ensure their success. Central to this ecosystem are the team, whose expertise and vision drive the firm’s trajectory; the portfolio companies, startups or businesses that determine the return on investment; and the Limited Partners (LPs), who fuel the firm with capital. This article focuses on the nuances of fostering and maintaining relationships with these LPs, emphasizing their pivotal role in the firm’s longevity and prosperity.
LP Management Goals
The primary objective of LP management is to forge an enduring personal and financial relationship with your Limited Partners so that they continue to invest in and support the funds of the firm in a mutually beneficial manner.
Signs of Success
Responsive Communication: LPs who promptly reply to updates or inquiries show active interest and engagement.…
Securing Limited Partners is a formidable task that demands persistence, meticulous research, and strategic networking. For the average fund, this means courting nearly 250 LP prospects and pitching to a majority of them, only to culminate in a select few actual commitments. This article elucidates the exhaustive process, underscoring the challenges and providing a roadmap to effectively source and close LPs in the investment realm.
Researching LPs
Sourcing potential Limited Partners necessitates the usage of multiple research platforms. These platforms, whether digital tools or networks, provide data and insights about potential LPs, their investment behaviors, and affiliations.
LinkedIn: A hub for professionals, it can identify LPs by job titles, backgrounds, and company affiliations.
CrunchBase: This platform offers insights into businesses and their associated stakeholders, ideal for locating previous investors.…
As an emerging venture capital fund manager, identifying and engaging with the right Limited Partner (LP) archetypes is crucial for your fund’s success. This article aims to guide you through the process of identifying relevant LP archetypes, developing personas, creating target lists, and testing receptiveness to your fund’s offering and thesis.
Step 1: Identify Relevant LP Archetypes
Step 2: Develop Personas for Targeted LP Archetypes
Step 3: Create Target Lists of Actual LPs
Step 4: Test Receptiveness
Step 5: Refine Your Approach
Step 1: Identify Relevant LP Archetypes
Begin by familiarizing yourself with various LP archetypes, such as exited founders, high net worth individuals, family offices, bankers, tech executives, and small business owners, among others (see below). Evaluate each archetype based on their alignment with your fund’s investment thesis, industry focus, and stage preference.…
Limited partners, commonly referred to as LPs, are passive investors in venture capital funds. They are the main customers and ultimate backers of the venture capital model. Without LPs, venture capital would not exist. The relationship between the fund managers and the Limited Partners is complex. This article covers the history and reality of managing Limited Partners.
The History of Limited Partners
The concept of Limited Partners traces its roots back to ancient maritime trade, but its formal legal structure originated in France with the “commandite” system in the early 18th century. In this arrangement, silent partners, or “commanditaires,” would invest money in a trading or business venture without being involved in its operations. These investors had limited liability, which meant their financial loss was restricted to their investment.…
Venture capital firms often employ different investment models for portfolio construction to maximize returns and minimize risks. In this article, we will explore three of the main models – Focused, Dispersed, and Hybrid – and discuss their respective pros and cons. By understanding the characteristics of each model, managers can make more informed decisions about which model best suits their investment goals and preferences.
Focused Model
The Focused model is a high conviction investing approach where the venture capital firm makes a small number of thesis-related bets in companies the manager strongly believes in. For example, a venture capital firm might concentrate its investments in generative AI startups.
Focused Model Example
In the Focused model, a venture capital manager might concentrate investments in the generative AI space, believing that a small number of companies will have outsized returns.…
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3.3 – Venture Fund Metrics
Venture fund metrics provide quantitative measures to evaluate the performance of venture capital investments. These metrics help investors, fund managers, and stakeholders make informed decisions. Below are some of the most important metrics to understand:
Internal Rate of Return (IRR)
Definition:
IRR is the annualized rate showing the growth of an investment over time. It indicates the break-even point when considering the time value of money. It’s a relative measure, comparing the returns of different investments.
Usage:
Investors use IRR to compare the profitability of different investments. A higher IRR indicates a more desirable investment. It helps in understanding the potential return on an investment over time.
Example:
Suppose a venture capital firm invests $1 MM in a startup. After five years, they exit the investment, receiving $2 MM.…
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3.2 – Venture Fund Economics
Venture fund economics refers to the financial structure and incentives of venture capital funds. Central to fund economics is the 2/20 model, a compensation framework that has become emblematic of the venture capital industry. This article delves into the intricacies of venture fund economics, shedding light on the origins, mechanics, and enduring relevance of the 2/20 model, while also exploring its variations and the strategic implications of different profit distribution structures.
2/20 Model History
The 2/20 model is a standard compensation structure for venture capital funds. It consists of two main components: a 2% management fee and a 20% carried interest.
The roots of the 2/20 model can be traced back to the post-World War II era, a time when the venture capital industry was in its infancy.…
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3.1 – The Power Law in VC
The Power Law in venture capital (VC) is a principle where one single investment yields returns larger than all other investments combined, often by orders of magnitude. The entire global venture capital industry’s success often hinges on a few companies that rise to prominence, overshadowing their peers and redefining markets. This article delves deep into the origins, implications, and strategies surrounding the Power Law in venture capital.
The Power Law
The Power Law concept originated in the late 19th century with the work of Vilfredo Pareto, an Italian economist and sociologist. Pareto noticed that 20% of the pea pods in his garden produced 80% of the peas. He extended this observation to wealth distribution in society, noting that 80% of the land in Italy was owned by 20% of the population.…
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2.3 – Venture Capital Processes
Venture capital involves numerous processes. This article offers an overview of key procedures, such as creating an investment Thesis, forming a team, managing a fund, and others. Each procedure is critical in a venture fund’s lifecycle. This article serves as an introduction to these essential venture capital operations.
Writing the Thesis
A Thesis gives a fund its strategic direction. The Managing Partners, who are normally the founders of the firm, typically craft the Thesis. A clear, concise Thesis is crucial for guiding a fund’s investment choices and attracting potential investors.
Steps
Define the geographic focus of investments
Identify the sectors or market companies the fund will target
Highlight the unique strategy or “secret sauce” of the fund
Determine the stage of venture fund
Set a target for the amount of capital to be raised
Identify the fund’s name
NOTE: Completing a fund Thesis is an interactive process that can take four to six weeks.…
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2.2 – Venture Capital Entities
Venture capital firms consist of three main components: the Fund, the General Partner (GP), and the Management Company (ManCo). Each has a significant role in the operation and success of the firm. Understanding the responsibilities and interactions of these entities is fundamental to navigating the venture capital ecosystem. This article aims to provide a comprehensive understanding of these components.
The Management Company
The Management Company is the brand owner. It manages intellectual property and vendor relationships. Its operations are overseen by Managing Partners, and it employs full-time staff and vendors as needed. The ManCo receives management fees, which cover its operating costs. It usually resembles a small business.
Functions
Manages brand image
Protects intellectual property
Handles vendor contracts
Operates with full-time staff
Uses management fees for operational costs
Typically, in the first round of fundraising (Fund I), firms aim to minimize expenses by avoiding having staff and opting to distribute management fees instead of paying salaries.…
Venture Capital structures refer to the organizational models adopted by venture capital firms to manage and direct their investments. These models or “structures” dictate how a venture capital firm raises, allocates, and manages the funds it invests in startups with high growth potential. From traditional funds to venture builders, special purpose vehicles, and outsourced funds, each venture capital structure boasts unique strategies and characteristics, tailored to distinct objectives and market dynamics. In this article, we explore these four venture capital structures, examining their mechanics, advantages, disadvantages, and use-cases to illuminate the dynamic, multi-faceted nature of the venture capital landscape.
There are four structured commonly used with venture capital:
Traditional Funds: These firms collect funds from partners and invest across multiple startups, planning for a profitable exit.…
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The VC Lab Way
The VC Lab Way is an action-oriented approach to getting involved in venture capital that merges the economic gains of the asset class with ethical stewardship. It’s not simply about finding and investing in high-growth startups in a responsible way; it’s also about making conscious investment decisions that align with broader societal values and goals.
We are here to fix the problems of the world by inspiring and supporting ethical investors to fund solutions. Time is of the essence. We need solutions now.
Adeo Ressi, CEO of Decile Group, parent of VC Lab
At the heart of the VC Lab Way lies a vibrant culture that champions a get-it-done attitude, resilience, and self-awareness. We believe in the power of proactive problem-solving, and we instill these values into every participant.…