For many years there has been a great degree of mystery and allure around the whole venture capital industry. I never really understood how a VC firm went about raising a fund, securing LPs; I frankly didn’t understand the whole process. Now that I have first-hand experience in the dark art of raising a fund, I thought I would give a little glimpse under the kimono as to how a VC goes about these things, even during a down and challenging economy. So how does a venture capital firm raise a fund?
It starts with an idea and vision. For me, it was about nothing more than trying to make the current VC model incrementally better. I saw a need, and came up with a solution. It’s essential to surround yourself with the very best people possible who can help carry out and execute upon your strategy and the concept that is laid out. This involves very expensive attorneys, specialist consultants, very connected individuals, partners, accountants, team members, communication and marketing firms, placements agents, collaborating with other private equity and venture firms and A LOT of networking in existing networks while simultaneously building new relationships. This is why venture capital is not for everyone. Guy Kawasaki has a great quote that I really like: "Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first."
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