“Start small. Start something. It was a game changer for me.”
The earliest thing that Varun Turlapati can remember dreaming of doing was being a train conductor. Growing up in India, he loved the idea of being at the front of a huge, powerful locomotive, as it barreled through unknown lands, carrying people to new places to explore.
“I think in some ways, that dream is still carrying me forward,” he says. “I don’t have an actual train, but I have been a software engineer for about sixteen years and now I get to invest in companies that are changing the world.”
Varun started working in startups in 2015. He had just moved to California and didn’t even know what venture capitalists were back then. The startup had some “lunch and learn” programs, and often some of the company’s investors would come in. He realized whenever investors were in the room, everyone’s demeanor changed.
The other engineers treated them with such reverence. They wanted to know everything they thought about everything. They were hanging on their every syllable.
“Who are these people?” he thought to himself.
Back then, he didn’t realize that VCs invested other people’s money. He just thought they were insanely rich people who also happened to be insanely smart about the market. But he knew this: he wanted to be one of them.
“It was, first off, the amount of knowledge they had, which I judged by the head nods across the room,” he says. “And they could write huge checks. Those two things put together put them in a position of influence and leverage. It started cranking wheels in my head to say, ‘This is something I would love to do at some point.’”
Varun was on an H1B visa at the time, so he concentrated on learning as much as he could as a software engineer. As many people, as many languages, going to all the meetups. He was voracious. He wound up at Roblox, which went public; his first windfall. That’s what started to open the floodgates for him as an investor. He could invest in some funds as a limited partner, and do some angel investing.
But the dream of being a full-fledged venture capitalist was still there. Once he became a citizen, he didn’t have anything holding him back.
He joined VC Lab, and friends were advising him he needed to raise at least $10 million given the area he wanted to invest in. It was slow going. He had done angel investing, but he hadn’t run a fund before, and the area they were investing in was nascent. It wasn’t the flavor of the month like AI.
He didn’t think it was immediately doable and he was eager to get going. When Decile Group announced the Start Fund, he was one of the first to jump on it.
Start Fund allows fund managers to raise a fund without six months of admin and $100,000 in costs. It also allows managers to shortcut a program like VC Lab, do a first close quicker, with less capital committed, and start investing sooner, because Decile Group is shouldering most of the risk.
Because of that, Decile Group takes an extra percentage point of the carry, and split the management fee. As Varun was discussing it in his cohort, some of the managers didn’t want to give up any of their economics, but to him it was a no brainer.
“They are providing all the support,” he said. “I was like, ‘What am I missing here?’ For me it was very crystal clear this was a first obvious step. I was like, ‘This makes my life way easier.’”
Being a start fund allowed Varun to do what he loved to do as a software engineer: iterate.
“Start small,” he says. “Start something. Just be able to start. Even a $500,000 close is enough to do a Start Fund. With a traditional fund, you have to secure a significant amount of soft commits - 10% or $1 million, whichever is the higher amount - before you can actually call funds and start investing. With a Start Fund, I could start with $100,000 in soft commits. Let’s just call the capital and do it. That was a game changer for me.”
Varun has been able to start investing and prove his thesis as he raises money. It’s a new, scrappier, more iterative way to build a fund.
“I haven’t yet raised a million, even with the Start Fund now, but I don’t have to worry because not only have we raised money, we’ve also started to deploy,” he says. “And it all happened in a very iterative fashion. LPs can see we are making progress. They can see the deals we are doing, they can see our pipeline. That would not have been possible without Start Fund.”
The best part about the Start Fund is that it’s a real institutional grade fund. It’s not an angel syndicate. It’s not an SPV that’s formed around one hot deal.
“I don’t have to be shifty,” he says. “Do you have a fund? We have a fund. Have you invested? We have invested. Do you have a pipeline? We have a pipeline. Are you still fundraising? We are still fundraising. But sometimes it takes time to raise all of the money. In my field of choice it just takes time. They don’t know much about it. We have to let them digest it and let them do their research. Ask us questions and build their confidence.”
Varun has found his fundraising goes in bursts, often around deals he’s able to close. He recently closed a deal, and it swayed about $500,000 in capital that had been on the fence.
“It comes and goes in bursts,” he says. “Now I’m in a lull. So I’m using the opportunity to go to conferences, to travel, to meet with companies and find more deals. Two days ago we met with three startups which are squarely in our thesis area. If we decide to invest in them, we’ll be able to go back and talk about them and raise more funds.”
One challenge Varun faced was how to talk about the fund to LPs, given Start Funds are such a novel way to create a venture fund. A few of them asked if it was “his” fund or not, since Decile Group shares most of the risk. He explained that he was the managing partner, driving all the day-to-day management and investment decisions, and told LPs they were just getting another layer of security for their investment, with Decile’s involvement as co-GPs. In the end, they saw it as a positive.