Thread by @Samirkaji

For Emerging VC funds (particularly Fund I), the period after you do a final close or “The I’m not fundraising (but really are)” is nearly as important as the real fundraise itself.
See too many mistakes where managers pause for 2 years until it’s time to raise next fund. Start/

1/ On average, nearly 2/3rd’s of capital going into Fund I VC firms are non-inst. (FO) as opposed to <40% for Fund III.

2/Non-instutional investors have the highest churn rates regardless of economic climate, with 30-50% of capital likely disappearing for next fund (that’s counting ppl that increase).
Can be higher in downturns, where liquidity is at premium

3/ Most managers are looking to increase fund size of Fund I to Fund 1.5X to 2X. If you have 50% of non-inst capital drop off from Fund 1 to Fund 2, you are essentially starting at a point where you are only 30% committed on Fund 2.

With competition for inst. dollars and long sales cycles, starting from a cold start is very, very tough. Harder when capital is constrained and inst. are either pulling back, or culling portfolios

5/Most inst. LPs prefer relationship building cycles where decision making isn’t rushed – It’s hard enough to tell one manager from the other, and it takes time to develop an understanding of vision, differentiation, and style.

6/The day you do your final close is not the day you stop fundraising. Ok to take a small break, but you should still allocate some time (could be 10%) to building inst. LP relationships during your “quiet fundraising period”.

7/ Any firm that has true durability will want to strive to at least 60-70% inst. - of course there are exceptions, but that’s all they are.