Charles is a principal at Bling Capital and manages his own angel investment vehicle. He was previously an investor at TI Platform Management and Manhattan Venture Partners. Over the course of his career, he has quartered investments in nine unicorns.
As a foundation As a member of TI Platform Management, I have invested more than $ 200 million in first-time fund managers around the world. This portfolio includes one of the earliest institutional audits at Atomic Labs (over $ 170 million, SaaStr (over $ 160 million) and Entrepreneur First (over $ 140 million).
After earning successful early returns as a fund manager and VC (and recently launching my own angel fund), I have formulated various best practices and strategies for investing in fund managers. If you're looking to raise your first fund, here's how.
Understand the LP mentality
Just as VCs categorize the founders of startups, limited partners (the investors in your venture fund, also known as "LPs") have an unwritten way of categorizing risk managers. The vast majority fit one of three archetypes:
- Former founder / operator was VC
- Spin-off manager from a mega fund
- Angel investor with a strong track record
Here's how each is perceived by institutional LPs and the unique blockers they have to overcome:
Former founder / operator was VC
Former founders / operators often have strong intuition in identifying founders and an empathy / relationship on the path to starting a business that increases their win rate on deals. In addition, after building an innovative company, they can gain special insights into the direction of the market. However, building a business requires different skills than starting a fund.
If you're a former founder / operator who has become a VC, expect LPs to ask questions that say: