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Syllabus: how to launch, manage, and invest a VC fund

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.  Most of my research is also relevant to private equity. I thought it would be helpful to compile my past articles in one place.  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?

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

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.  

See How Private Equity and Venture Capital Investors Are Eating Their Own Dogfood: Using technology as a competitive weapon.  

5) Market.  

See How Private Equity and VC Investors Are Using Social Media.

6) Raise capital.  

See Fundraising Hacks for Venture Capital and Private Equity Funds and my book, The Virtual Handshake: Opening Doors and Closing Deals Online.

7) Originate investments.  

Where Are the Deals?!: Best Practices of Private Equity and Venture Capital Funds in Originating Investment Opportunities

How to identify technology trends for macro investors

8) Manage deal flow.  

See my summary on how lead investors build out their syndicate.   

9) Due diligence.  

See How to Judge Investment Pitches.

10) Negotiate transaction. 

Best practices in building financial models

Template financial model

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.  

Beyond the Money: Best Practices of Venture Capitalists in Helping Early-Stage Companies Create Value

It’s the People: Improving Private Equity Portfolio Company Valuations by Working with Operating Executives .

13) Time, market, and exit investment.  

See my overview of sales technology tools useful for B2B sales.

14) Grow the firm.

How to scale a VC (or private equity) fund.

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  1. […] you want to be a VC? David Teten provides a thorough overview of what it takes to start your own venture capital fund. And Samir Kaji of First Republic Bank offers up advice on how to write a great Micro-VC […]