Follow me @samirkaji for my random, sometimes relevant thoughts on the world of early stage venture and start-ups. This post serves a part one of a two part series that Beezer Clarkson at Sapphire Ventures and I are co-authoring to help VC’s (specifically emerging managers) navigate through fundraising cycles and engender better and more relevant relationships with LP’s. During the 3rd annual emerging manager focused RAISE conference, I presented the results of an LP survey that was conducted with RAISE LP conference attendees prior to the event. The primary goal of the survey was to better understand the current temperament of LP’s as it related to venture allocations in emerging managers. The sample size of the survey was approximately 60, and represented a good cross section of LP profiles with fund of funds, foundations, endowments, family offices, and wealth managers all participating. Without question, there are many components to a successful fundraise. An important factor in mitigating fundraising friction is a keen sense of the profiles of LP’s, their typical preferences, and sensitivities, and then using this knowledge to build a fundraising strategy centered on LP/GP fit. We’ll discuss how to assess LP/GP fit in part two of this series, but in this post, we’ll review the findings of the LP survey in detail. I’m linking the entire presentation here for reference. Survey Findings For new venture managers (many Fund I/II profiles), family offices and high net worth individuals are unequivocally going to comprise the majority of the limited partner base and time should be accordingly spent to this finding. For all of nearly 150 venture funds on Fund I and II that we’ve tracked since the beginning of 2017, nearly 50% represent funds that currently have <$20MM closed. As the chart below shows that >60% of institutional allocations are $5MM+ and recognizing that LP’s rarely want to constitute more than 20% of the fund, institutional LP’s often represent poor fits for those that are raising funds of $25MM and lower. This further highlights the importance of thinking realistically when setting fund targets as to avoid too many unnecessary conversations with those LP’s that aren’t immediate fits. Although no LP type indicated that they expected to allocate extremely actively to emerging managers (Fund I/II) during the next 18 months, Fund of Funds appear to be the most active allocators on average. It’s important to note that there are any more single family offices than fund of funds and we expect that if examined universally, that the majority of emerging fund allocations by volume will likely come from family offices. In an informal survey we conducted with emerging GP’s earlier in the year, fewer than 35%...
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