Closing a Limited Partner

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising funds, the VC fund manager needs the ability to close Limited Partners.

Here are some closing techniques to consider:

FOMO

The Fear of Missing Out is one of the most often used techniques for closing.

To use this, the fund manager must demonstrate how other investors are coming into the fund.

It's best to create some scarcity by showing the current capacity left in the fund and then comparing it to the interest from the investors.

To do so, calculate the interest and committed funds to show the fund is potentially oversubscribed.

For example, the fund is raising $50M, and has $40M invested so far.

Show the interested and committed funds at $25M.

This shows there's more interest than fund capacity.

Deadlines

Break the raise into rounds or tranches and run deadline campaigns.

When the fund reaches two-thirds of the capacity of the round, then declare a deadline in six to eight weeks.

This forces investors to make decisions or risk missing that round.

Incentives

Offer incentives to investors who come in by a certain date.

This could be warrants, advisor shares, fee discounts, preferred returns, or follow-on investment opportunities.

Consider these techniques to help close the fund round.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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Marketing documents for a VC fund

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In raising funds from Limited Partners, make sure to prepare the following marketing materials:

Website.

The website should reflect the values of the general partners and details about the fund.

This is the first place investors go to learn more.

Pitchdeck.

Just as startups use a pitchdeck to communicate their deal, a VC fund needs a pitchdeck to present to Limited Partners.

One pager.

A one-pager describes the overview of the fund, including investment thesis, track record, and bios of the general partners.

Due diligence questionnaire.

It's a summary of the fund and how it compares to others, such as ESG funds.

Data room.

The basic documents and records of the fund should be in one place that LPs can access.

Track record.

A spreadsheet showing the track record of the fund with all the basic metrics, including TVPI, DPI, and IRR.

Limited Partnership Agreement.

This document lays out the details of the fund, including investment thesis, capital calls, management fees, and distributions.

Private Placement Memorandum.

This document highlights the financial characteristics of the fund and the risks associated with the investment.

Make sure you have these documents ready for your fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

The Ideal Investor Profile of a VC Fund

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

To find the ideal investors for your VC fund, consider the following:

Value proposition

What is the value proposition of the fund?

Answering this question will narrow the field of investors dramatically.

What is the solution your fund offers?

This could be funding women-led businesses, startups using the latest technology or others.

What community do you have?

Investors that fit your fund are looking to join a like-minded community.

Return expectations

The fund's return will determine which type of investor will consider it.

Competitive advantage

What advantage does your fund have over other funds in the space?

Uniqueness

Does your fund stand out or does it get lost in the crowd of many others?

Consider how to communicate these characteristics of your fund to prospective investors.

Use this criteria to guide your search for Limited Partners for your VC fund

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.