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22 Feb, 11 tweets, 3 min read
Today's tweetstorm is on

How We Tripled Our First VC Fund to Raise a $33.6m Fund 2

elizabethyin.com/2021/02/22/how…

Will cover key learnings & new tactics not mentioned in my Fund 1 post.

Read on >>
1) (This is my Fund 1 post: How we raised our $11.5m VC Fund 1)

elizabethyin.com/2018/12/19/how…
2) A major hurdle was running into the 99 investor limit per SEC rules. Because VC funds (for the most part) can only take 99 investors, we had to turn away a LOT of $100k-$250k checks in order to raise a larger fund.

Mindblowing right?
3) We started building relationships for Fund 2 right after we raised Fund 1.

The fundraising journey is basically non-stop for 4 years or so.
4) We timed our press for Fund 1 to help kickoff our Fund 2 fundraising process.

I often recommend founders "save their announcements" for when they need it, and we did the same.
5) We used the scarcity of investor slots as a forcing function to drive smaller investors to close quicker since we could not accommodate so many in this fund.

Smaller investors can be a great way to build momentum to help w larger investors. (for both funds & startups)
6) We expanded our investor search into Asia. While I feel so grateful to many people who have helped us w/ this whole journey, thank you @cjin for joining us and helping us expand our network!
7) Blogging and tweeting really works. It helps potential LPs understand who you really are and what you believe.

(One of our LPs even read in my blog about how I don't fold my laundry, and that was a great pt to build rapport on!)
8) We really "hustled" to get our paperwork done during COVID just as the world was crashing. DHL and UPS limited their flights out - it was unclear if mail was working.

We got all our necessary paperwork in just 1 day before everything shut down.
9) A no isn't forever. @foundrygroup turned us down twice before we were able to convince them to join our journey.

We are so honored they decided to invest!
10) Lastly, thank you to the entire Hustle Fund family - esp our Fund 1 and Fund 2 LPs (incl founders who became LPs!) for investing, introducing us to investors, and hosting us in your respective cities!

• • •

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More from @dunkhippo33

Elizabeth Yin Profile picture
24 Feb
People have often asked me how I make decisions at pre-seed when there is no information.

@HustleFundVC we invest pre-revenue (I don't care about traction at all).

A thread >>
1) At a high level, the startup idea matters a lot.

In fact, I personally think (and my own teammates will certainly debate me on this) the idea matters more than the founders. 😮

(Que the tomato throwing)
2) This is NOT to say founders don't matter. They DEFINITELY DO. There's something special when amazing founders work on amazing business ideas.
Read 26 tweets
Elizabeth Yin Profile picture
22 Feb
To celebrate our Fund 2 launch, we are hosting a 24-hour Clubhouse event starting tmrw at 8am PT (Tues Feb 23)

Here's a glimpse of the schedule that may be interesting to both founders and investors

Read on >>
1) 8am-10am and again at 4pm-6pm, we'll talk about how we raised our Fund 1 and our Fund 2.

Are you an emerging fund manager or angel thinking about starting a fund or raising the next one? Ask us anything:

2) 10am-11am Our newest team member @will_bricker will talk about jumping into VC.

Trying to land a job in VC? Ask Will anything -- this is a quick background on how he got his job w/ us:

Read 14 tweets
Elizabeth Yin Profile picture
20 Feb
VCs and fund-of-funds are going to throw tomatoes at me with today's tweet storm:

Ownership *doesn't matter* for early stage investing.

And yet almost every VC and fund-of-fund cares about it. 😮

Here's why >>
1) First some context. Fund-of-funds and VCs are always talking about needing to buy enough ownership in their portfolio companies.

But almost no one questions why.
2) But here's a thought experiment. If you invested $5k into Uber's seed round and held on to the IPO, you would have made ~$25m.

$5k doesn't buy you any ownership. So is that a failed investment? Obviously not.
Read 25 tweets
Elizabeth Yin Profile picture
19 Feb
Today's tweet storm is about business strategy at your startup.

If you think about building a company, it's a bit akin to one of those resource allocation board games. You know - like Catan or Tzolk'in or 7 Wonders -- stuff like that.

What is the strategy for your startup? >>
1) If you don't play resource allocation games, the general premise is that you try to amass resources (i.e. an audience), and then at some pt in the game you need to figure out how to turn those resources into victory points (i.e. monetization).

The same applies to startups.
2) In the most ideal world - infinite time and runway, the strategy is always focus on amassing resources. Then you can in one fell swoop monetize super easily all at once (more or less).

However, in both the game and real life you don't have infinite time and runway.
Read 10 tweets
Elizabeth Yin Profile picture
17 Feb
Today's thread is on cap table 101 for new founders.

What is a cap table? Why it's impt? What investors typically ask for? Where founders often go wrong w/ re: to cap tables?

Read on >>
1) Let's talk about company ownership:

When you have a company, in the beginning it's owned by you and maybe a co-founder or so. If you think of your company like a pie, in the beginning, the co-founders own the whole pie. And then you start allocating pieces to others
2) What is a cap table?

A cap table is a spreadsheet that has a list of all the ppl and entities that own pieces of your pie (your company). In the beginning, there may just be 2 line items or so for you and your co-founder.

It will list your name and how many shares you own.
Read 22 tweets
Elizabeth Yin Profile picture
17 Feb
Today's thread is on SEC limitations in raising a fund.

This may sound like a BOOOOOOORRRRING topic but it has incredible ramifications for any emerging fund manager and to some extent, founders and how they get backed.

More >>
1) VC funds (right now) require their investors (LPs) to be accredited. (LPs must be worth $1m+ excl primary residence OR earning $200k+ per yr as an individual)

This in itself is limiting, but today's thread is not meant to debate who should be accredited.
2) But that being said, fund managers cannot just accept all accredited investors who want to invest. There's a limit of 99 investor slots.

This means that I, as a fund mgr, have to pick my LPs carefully.
Read 21 tweets

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