Over the past decade, I’ve (somewhat accidentally) put together on this blog a syllabus on how to launch, manage, and invest a VC fund. Almost all my research is also relevant to private equity. I break the process down into 14 steps:
1) Determine your strategy.
– Should you be a momentum or a value investor?
– Should you invest in follow-ons, and if so, how?
– Should your fund use Revenue-Based Investing or traditional equity VC?
– How do you differentiate? See How to get superior returns in VC
– What geographies will you focus on? See Why venture capitalists are investing in international startups.
– What is your culture? See Design your company culture like the world’s largest hedge fund.
– What is your strategy for working with universities?
– What is your diversity strategy? See Why are venture capitalists (76% white men) ignoring the future?
– Exploring Evergreen Funds with a VC Investor Who Raised One (written by another investor)
2) Assemble the team.
– Should you co-found a company with your friend? And how do you split the equity?
– Microcredentials for the effective VC investor
– How to Negotiate a Partner Role at a Venture Capital Firm, or Recruit a Partner
3) Launch.
You will next have to address the operational issues: org chart, incorporation, financial structure, and so on. See Checklist for Launching a New Venture Capital Fund.
4) Design your tech stack.
5) Market.
– How Private Equity and VC Investors Are Using Social Media.
6) Raise capital.
– Fundraising Hacks for Venture Capital and Private Equity Funds and my book, The Virtual Handshake: Opening Doors and Closing Deals Online.
7) Originate investments.
– How to identify technology trends for macro investors
– The Next Great Entrepreneurial Opportunity: How to Identify Market White Space (VIDEO)
8) Manage deal flow.
– How lead investors build out their syndicate.
9) Due diligence.
– How to Judge Investment Pitches.
10) Negotiate transaction.
– Best practices in building financial models
– Valuing startup employee options
11) Monitor and report investments.
See How to run your company based on metrics: what, why, how, who, and when. You might be able to use Totem, a VC operating system which we spun out of ff Venture Capital. We also use Carta, which specializes in cap table management and has launched a fund administration service .
12) Accelerate portfolio company value.
I’ve posted some essays focused on the investors’ point of view:
And also a lot of material from the point of view of a startup management team:
– Shaking the Money Tree: Social Media and Other Innovative Tools for Raising Capital (VIDEO)
– Recruiting Hacks: How to Woo and Win the High Performers (VIDEO)
– How to Manage Your Board Meetings
– Financial Modeling for Entrepreneurs
13) Time, market, and exit investment.
See my overview of sales technology tools useful for B2B sales.
14) Grow the firm.
