📶 mistakes emerging managers make

Roll out of bed, start working on multiple businesses simultaneously

Crank out as much work as possible before I go into calls

Pitch LPs

Field and respond to emails from my quarterly LP report that went out yesterday

Ask for intros to other people I should be talking

Look up and it’s already 6pm

Cook dinner, have people over to eat

Go back to work until I pass out and bang out everything on my to-do list

EM mistakes and how to fix them

The owner of the Jazz is forming a $1b venture fund

We’re fixing extinction now

As a fund manager, you are also a firm builder. Having a clear long-term vision for the firm you’re building guides strategic decisions like your investment focus, fund size, team, and more. Of course, this vision will evolve as you invest, learn more about the kind of investor you want to be, and what’s working through feedback from founders, LPs, and the broader market.

Write more. Writing can be an extremely effective way for first-time fund managers to attract the founders, companies and co-investors they want to attract.

Smaller LPs can be extremely helpful with sharing deal flow, helping portfolio founders, co-investing in opportunities, and more. Furthermore, warm LP intros from people that are investing in your fund are often the best kind of intros. An LP writing a $10K check might introduce you to an LP that writes a $1M check. Many fund managers instrument minimums to avoid exceeding a 99 LP cap, but there are ways to structure the fund to increase this limit.

Like GPs, LPs have limited time and receive a flood of inbound requests from those raising, so be direct about your objectives when reaching out to LPs. If you want to pitch them for a raise, say so. If you want to start building a relationship for future raises, say so.

Align your fund size with your fund strategy. A larger AUM is appealing and has many advantages but there are also tradeoffs. This is one of the most important decisions a GP will make as it informs the number of deals, check sizes, management budget, and many other variables for the next several years.

Be thoughtful about the trade-off between ownership and squeezing into competitive deals. Ideally, every company you back can return the fund (or more), although this isn’t a blanket “rule” and ultimately ownership targets should be established in your portfolio construction (more on that below).

Buying (or maintaining) ownership by writing multiple checks over the life of the company can have a major impact on the fund’s performance. As an investor, you typically have more insight into how well a company is doing, giving you an advantage in spotting and getting access to portfolio breakouts. Securing pro-rata rights when making your initial investment can help but ultimately you should plan to earn your right to invest in future rounds by being genuinely helpful.

Have a clear portfolio construction plan that enables you to deliver on your fund strategy. Portfolio construction has a lot of variables that should be modeled out with realistic assumptions.

Keep LPs informed on how we’re investing their capital. Clear, consistent LP updates establish trust and may encourage LPs to write a check in consecutive funds. As a bonus, these updates are an opportunity to put LPs to work for the portfolio and remain top of mind for future deal flow.

Support every portfolio company, not only because it's the right thing to do, but because each one might be your fund returner. Disengaging with a portfolio company may harm your ability to double down on the breakouts, as mentioned earlier.

If your goal is to lead deals, you’re ultimately competing for a single spot (vs. multiple spots when writing smaller checks). Relying entirely on inbound deal flow may magnify negative selection bias for lead investors. Instead, invest more in outbound and hunt for the next opportunity through your network, proprietary data sources, and other creative channels.

Do a first close to start “executing” on your fund. Doing multiple closes can also help nudge LPs to wire in time for the next close.

Utah Jazz owner forming $1 billion venture capital fund (Axios)

Nvidia Faces Dilemma After Chinese Firms Rush to Order $16 Billion in New AI Chips (The Information)

Does Colossal Biosciences’ dire wolf creation justify its $10B+ valuation? (TechCrunch)

LPs focus on performance as PE AUM growth slows (Pitchbook)

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