This session teaches first-time fund managers one structural idea: the limited partner who writes your first check isn't an institution you need access to, it's a person who already knows your work. Kelly Schricker of Decile Group hosts, and Mike Suprovici, co-founder and Head of Acceleration at Decile Group, explains why venture capital has split into two separate industries and why almost all the fundraising advice you see online belongs to the other one. It's built for anyone raising a first fund who keeps asking where LPs come from.
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Venture Split Into Two Industries, And You're In The New One
Mike opens with the reason so much fundraising content feels useless. There's a bifurcation happening in venture. On one side sits the established industry, roughly 4,000 funds at most, where capital recycles among people who broke in decades ago. On the other side are founders of VC firms, the new and emerging managers, and the dynamics that govern how those firms get built and funded are completely different.
The problem is that the loudest voices belong to the first group. Big institutional allocators with large followings publish advice constantly, and Mike is blunt that it doesn't apply to the people on this call. Those allocators are employees, not founders. They won't see results from your fund for 10 to 15 years, so they're not going to take a risk on an unproven manager. Many of them are prevented by charter from investing in a first-time fund at all.
None of that stops new managers from raising. Mike notes several record months in a row and roughly two to three times the volume of the same period a year earlier. So emerging manager LPs clearly exist and are funding funds like yours. They just don't look like the LPs you've been taught to picture.
What Emerging Manager LPs Actually Are
Strip fundraising down to first principles and you get one word. As Mike puts it, "fundraising is about trust." If someone trusts you, they'll back you. If they don't, they won't.
That matters more here than almost anywhere else in finance. A startup has a product and traction an investor can underwrite. A fund has a human being asking for money to manage blindly for 15 to 20 years. There's no product to point at. Emerging manager LPs are underwriting you personally, which is why the first commitments come from people who've watched you perform.
Mike's list is broad. An old friend from college. A mentor from your accelerator. A former colleague. An advisor. An angel from your first startup. He's careful to say this isn't a push to hit up friends and family if that isn't your style. What emerging manager LPs have in common is that they've seen you do something well. That's it.
This also explains why decks matter so little at this stage. Very few managers raise on materials. They raise because someone already believes they can invest.
How Emerging Manager LPs Compound Into Network Effects
Starting with your trusted network isn't sentiment, it's return on time invested. Chasing people who don't know you means spending months building trust from zero, and trust is slow. Starting with people who already trust you gets money in the door, and the earliest emerging manager LPs are almost always in that group.
Mike walks through a real example from a Decile partner. A recent check, around 250K, came from someone the manager knew in college 20 to 25 years ago and hadn't spoken to in years. It didn't come from cold outreach. An existing LP in the fund asked whether the manager knew this person, offered the introduction, and spent their own credibility making it. The new investor liked the manager, liked the thesis, and had validation from someone they trusted. That's the pattern.
Once a critical mass of emerging manager LPs is in, their networks open, then the networks of those networks. That's how fund one gets raised, and Mike says it's how essentially every self-made VC has started. The rare spinouts have their own problem, because the track record belongs to the firm, not to them.
Then fund two compounds. If you've run fund one well, most of those LPs double down, and whatever you raised the first time becomes the first close of the next one. Small proof of concept fund, then a bigger fund two on extended networks, then a much bigger fund three. At that point the institutions Mike told you to ignore start getting interested.
Nobody Has A Track Record, So Stop Waiting For One
An audience question asked how to build LP trust without a track record. Mike's answer: "no one has a track record." From a professional allocator's perspective, a track record means two or three funds with real DPI. Angel investing doesn't count. Running syndicates doesn't count. He isn't defending that standard, he's describing the conditions on the field.
Which means there's no sequence of steps to complete before you're allowed to start. The apprenticeship model is gone. With Start Fund you can do a first close at $150,000, and the infrastructure costs that used to make anything under $5 million impossible are handled. Mike's advice is to go talk to people who trust you about your fund now.
Let Emerging Manager LPs Set Your Fund Size
Asked how to pick a first fund size, Mike pushed back on the premise. Your ability to raise determines your fund size, not an aspirational target. Test demand with your confidants, see how much you can get in hard circles across five or ten meetings, then apply a realistic multiple for a year and a half of hard fundraising.
Getting this wrong is the failure mode he's most forceful about. Fund models scale up, not down. Announce $10 million and land $8 million and the model breaks, because you can no longer make the number of investments the strategy requires. Then your LPs are unhappy and future allocators see fundraising risk, which follows you into fund two and fund three. Oversubscribing is fine and makes you look great. As Mike says, "You just can't ever be undersubscribed."
Frequently Asked Questions
How do I position fund two when it's too early to show performance? Every fund two has this problem. There's rarely real performance yet, so what LPs underwrite is how you handled fund one. Was it professional? Was the back office real? You point to companies that look like potential fund returners and explain the strategy you're doubling down on. Mike adds one hard requirement: you need at least half of your fund one LPs to come into fund two, because on and off list references will surface it.
What if my "fund one" was really an SPV or a makeshift structure? Then don't call your next raise a fund two. Mike is direct that renaming a multi-asset SPV or an improvised LLC as a fund gets caught in diligence, and intellectual honesty is what institutional LPs consistently say they're looking for. If that's your situation, VC Lab is the right program, not Emerging Institute, and you want to be institutional grade from day one.
What's the difference between Venture Institute and VC Lab? Venture Institute is an educational program for people learning how venture works or looking to break into the industry. VC Lab is not that. In VC Lab you're expected to close a fund, with at least $100,000 in signed commitments within the first month. The average VC Lab manager reaches a close in three and a half to four months, while managers outside the program can take years if they get there at all.
Do the programs cost anything, and can I do this part-time? There's no cost. Mike explains that charging would create a conflict, since the program would need to keep underperformers enrolled instead of asking them to come back when they're ready. Decile Hub and the tooling are included too. On part-time, yes, especially with a Start Fund, and that's how most people begin. But expect to pitch 300 to 500 LPs over an 18 month cycle, and expect that most managers go all in during fund one or by fund two.
Start Your Fund With VC Lab
If this session lands for you, the next step is an application. VC Lab is the program for managers closing their first fund, and applications for Cohort 22 close this coming Monday, with the cohort beginning in mid September. Managers raising funds two through four should look at Emerging Institute, anyone still learning the mechanics of venture should look at Venture Institute, and Start Fund is the path to a small first close without the traditional infrastructure burden. You can compare everything on the programs overview, and if you're unsure which fits, apply anyway and the team will point you to the right one.
Watch the full session here: https://www.youtube.com/watch?v=N6MEUfc2GjI