5 lessons we’ve learned from building a venture fund from scratch • TechCrunch

This month, it’s us Five years after making the reverse. Along the way, we’ve raised hundreds of millions from some of the world’s top institutions and have been fortunate to back startups like Ramp, Anduril and many more.

But just like the startup stories we’ve come back to, this journey has taught us many lessons.

As we reach this milestone, I’ve been reflecting on our history and wanted to share a few things I wish I’d known five years ago.

Basic logos are important

One of the few regrets I have is that we didn’t go after the logo sooner. We didn’t go after the hot companies launched by the big name companies. Instead, we stuck to our knitting in Fund I, leading on startups and teams that we were convinced and sourced through our own infrastructure. I was impressed that if we did exactly what we said we would – leading courses, great talent, offering a unique model to the market – we would stand out.

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It turns out, when you’re building a venture firm from scratch (limited track record, never worked before, etc.), logos matter. They are important to potential LPs who use them as a proxy for access. They are important to your peer group, who use them as a proxy for how accurate you are. And they’re important to founders, who will immediately visit your website to see if you’ve backed brand-name startups.

When starting a venture fund, you should expect to have a hard time figuring out whether you are qualified for the role within 3-4 years.

Fast forward to today. Ironically, our Fund I is one of the best of its vintage, according to Cambridge Associates’ benchmarks. But that performance took five years to blossom, making Fund II more difficult to raise. I once asked an LP, “Have you invested in any startups I’ve heard of?”

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It’s long gone, but there’s no doubt in my mind that logo hunting saved us a lot of time in the early years.

Reputation is vital

In an industry where your reputation and brand are the most important part of building a company, starting from day zero is critical. Initial logos are only one piece of the puzzle.

Invest heavily in building meaningful relationships with respected partners, founders and LPs. Send them relevant, quality deals for free. becoming Twitter friends; going to events; Joint investment in companies; And cold email them and grab coffee. Do whatever it takes, because relationships are rewarding in many ways.

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For example, one of the main ways LPs will evaluate you and your fund is by doing intensive reference checks with their existing investment managers. They will ask if Partner X has heard of you, if they have worked with you, and if they have brought you into a deal.

It requires minimal brand awareness and ideally involves years of collaboration and producing brilliant results. The best way to build a reputation is to send deals to investors that end up paying them a lot of money.


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