failure and make-up of the previous fund can determine the course of action.
When developing the fund, we first create an executive summary outlining the management team, the strategy, the market, and the preliminary terms of the fund. After this step, we speak to known investors, including limited partners in our current funds, about their interest in our new proposal. Based on their responses, we may fine-tune parts of the offering, such as the size or ambition of the fund, to maximize its attractiveness to potential investors.
After testing he fund's interest, we identify cornerstone investors, ideally past investors or other very large and prestigious investors. After securing these anchor investors, we seek investors in the broader marketplace and hope to complete the entire fundraising process in less than a year.
Investor Profile
Since most large investors don't want to take anymore than 10 percent of a particular fund, we must secure a bare minimum of ten investors. The smaller the group of investors, the easier it is to manage. Our ideal investors are past investors, as they already know our business and need only to be sold on the experience of the management team and the details of the market.
Capital Timeline
One of the misconceptions about venture capital is that fundraising is a quick and easy process. On the contrary, it can take anywhere from twelve to twenty-four months to raise a new fund. Although a highly successful firm on its tenth fund may only have to make a few phone calls to raise the whole fund, this is not the typical fundraising situation. Building the trust of the potential investors takes time.