Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued growth with the emerging manager landscape. One of the most common struggles I encounter with fund managers is being able to optimally set a fund target. While this admittedly isn’t an exact science, there are some fundamental considerations that help guide this exercise: Commercial Viability Irrespective of the amount of capital necessary for a given investment model, managers must have a very good sense of the LP environment to be able to accurately assess viability of contemplated fund target. From our experience we’ve found that teams with prior institutional track have commercial viability of approximately $25-$35MM/partner (seed), $50MM-$100MM/partner (Series A), and $100MM+ (growth). With limited or no prior experience, the numbers drop to about $10MM-$20MM/partner at seed, with little to no appetite for Series A and later. This is why well over 85% of new firms formed over the last five years have been seed firms. Here is a recent post I published around ranges of fundraising viability based on manager profile. You can view statistics on average institutional backing by fund number and manager profile here. One quick heuristic test I encourage managers to do is to test viability by going to all of their strong 1st degree connections to determine how much can be circled with a high level of confidence (always discount using probabilities as the chasm between verbal interest and sub docs is HUGE). You generally want this to be at least 25% of fund target. Lower than typically comes with elevated risk of a fundraise that won’t meet target and will come with a whole host of issues like the manager chasing the wrong profile of LP’s and having to decrease fund target mid-fundraise (!). Min/max for investment thesis This exercise is to determine the Minimum Viable Fund (MVF) size necessary to execute on thesis while concurrently positing the outer band of fund size after which point the investment business model holds. The latter is often expressed as a hard cap on maximum fund size. The easiest way to determine MVF is to think carefully through portfolio construction. I.e. if the goal is to lead seed rounds with initial checks of $500K-$750K, with 20–25 companies, and a reserve ratio of 1:1, your MVF calculation would yield a fund size of approximately $20MM ($500K*20 companies)*2 (reserves). Any amount less than that would impact thesis and economic framework. Conversely, raising a $75MM fund would be well outside the outer band of this thesis, and would give rise to a completely different business model, with different competitive parameters, etc. I’d encourage setting a fund target that is no more than 1.2X of MVF with a hard cap that...

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