Limited partners consist of pension funds, university endowments, family offices, and high-net-worth individuals.

Here’s how LPs select VC funds for investment.

Track record.

The VC must have a track record in the form of an IRR, TVPI, or MOIC metric.

Ability to deploy capital.

The VC must be able to allocate capital fairly quickly, as it takes time for the investment to mature.

Ability to source deals.

The VC must be able to find quality deals on a consistent basis.

This often means running an accelerator program, venture studio model, or other activity to bring startups into their sphere of influence.

Ability to win deals.

There’s competition for the good deals.

The VC fund must be able to compete against other funds for the best ones.

A fund model that is viable.

This means the fund invests the right amount into each deal to create a strong portfolio, but it is also manageable in number.

Consider these criteria for your VC fund.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.