Launching is easy; raising money is more difficult.
I have been lucky enough to be a partner of two different VC companies over the past nine years and have increased AUM by 10x both times.
Based on my experience, following the 15 steps below will help build the core of a high performing fundraising and investor relations function.
1. Build the company as much as possible before soliciting LPs
The more you are cooked, the more you are investable. The best possible move is to invest and stock some special vehicles that fit your strategy. However, this may distract you from the larger goal of raising a fund, not just a special purpose vehicle.
The next best move is to build your core team, for example, recruit an advisory board, venture capital partners and EIR. Finally, collect feedback. Yohei Nakajima, founder of Untapped.vc, said: "Before launching LP and building my company, I spoke to over 50 people I knew to get feedback."
2. Set up a basic marketing toolkit: presentation, website and social media
It is virtually mandatory to develop a detailed, data-driven presentation and, ideally, a video presentation. Your materials should ideally meet the expectations of the Institutional Limited Partners Association, even if you don't target institutions. Keep these documents constantly updated, so that all team members are aligned on key numbers, such as total dollars raised so far. You will look unprofessional if you are not coordinated.
Basically, hardly anyone invests on a deck basis; they want to talk to people. However, a high-credibility deck opens the door to a match where you have a chance to sell yourself.
Keep in mind that limited partners see formatting as an indicator of professionalism. It's worth investing some money in a graphic designer that can design a consistent website, business card, logo, and presentation templates.
Richard Dukas, CEO, Dukas Linden Public Relations, said, "If you don't have a website and you don't have a physical online presence, you probably won't get over the first hurdle with potential investors."
When you raise funds, you sell a luxury item. The less marketed your fund is, the more it is perceived as valuable. For example, one LP told me she prefers to receive personalized emails from fund principals, as opposed to a quarterly update sent in bulk. An extreme example of this is venture capitalists who don't even bother with a website, for example Benchmark and Thrive Capital. They're the equivalent of a nightclub with an unmarked door, but other investors will need to shape their tech stack on social media.
3. Make your online profile data-driven and internally consistent
All team members should have internally consistent and professional profiles on Linkedin at a minimum and typically also on Twitter, Facebook and / or other platforms you use. Specifically, it highlights the metrics by which you measured your past activities: size of exit, number of people you managed, budget you were responsible for, etc.
4. Set up a data room with a completed due diligence questionnaire
Among the most important information to include: yield history details, legal documents, fund organization chart, portfolio construction template, pages of a portfolio company, key staff resumes, and past investment case studies. We are using Digify to handle this.
5. Prepare FAQs for prospective LPs
Inevitably, you will receive a wide variety of one-time questions from potential LPs. Make sure you compile all of your responses into one document so you can recycle and refine these responses.
