Thread by @paigefinnn

proud to say I'm officially a graduate of @joelpalath's amazing emerging manager program @SuttonCapital! i got to meet & share learnings with great folks like @MacConwell @AntonioDSpears 🎉

the top ten things i learned...[a thread]

1. nontraditional funds require nontraditional LPs. most institutional LPs invest mostly in venture funds over $100M. joel recommended HNWI, Super Angels, Family Offices, apply to FoF classes for smaller "nanofunds"

2. the baseline questions informed LPs ask:
walk us through portfolio construction
stage / themes that you invest in
follow-on % and why (*this is a big one)
dealflow sources
prior deals / co-investors
competition

3. one off deals (like syndicates) are great ways to build relationships with LPs prior to starting a fund.

4. there is no "established" template to build your own venture firm & people can come from a variety of backgrounds.

you need alignment between founding partners that you're building a firm (company), rather than just a fund (more transactional).

5. evolution of strategy is important in LP convos - ie how has your strategy changed from syndicates / one off deals to the perspective of building a fund?

portfolio construction is usually a big part of strategy shifts

6. timing is crucial in a fundraise. save your "dream" conversations for later in fundraising when your momentum is obvious, otherwise your leverage is much less. (true for startup founders as well)

7. LPs place a premium on firm's strategies to engage in responsible investing - and more LPs are considering diversity & inclusion as a top consideration in responsible investing

key studies since 2014 have shown ethnic and gender diversity leads to financial outperformance.

8. american vs european waterfall in distributions:
american favors GPs - paid deal by deal (quicker)
european favors LPs - paid at aggregate fund level

9. cost savings for GPs include: management fee offests, no GP commit, frontloading fees for years of actively deploying capital. great article by @Cookie on this: techcrunch.com/2020/10/30/you…

10. people come first. venture is a long game, and having clarity on alignment - whether that's between 2 founding partners or with LPs - is crucial

thanks so much to Joel for putting on this program - really enjoyed getting to know everyone that participated!