Launch an institutional-grade VC fund in a day with no up front costs. 
Meet Start Fund
Previous Post
Next Post
2

Asked by

Community Member

on

in

Fundraising

Target returns communicated to LPs

I just got this questions from a potential LP: 

What should i assume in terms of overall MOIC and target timing? Appreciate exits are hard to predict, but what should be the target based on the seed-stage VC asset class? 3-5x MOIC and some liquidity in 10-12 years? 

How would you answer this?
1 See in Base
2

Answered by

Community Member

on

Avoid promising targeted returns to LPs. You may want to model out some returns based on your strategy showing High, Medium, Low scenarios at some point, but the answer to the LPs should be: "I will share our deck which will describe several returns scenarios for our fund. Since VC fund returns have asymmetric upside and follow a Pareto distribution, one successful investment can be the difference between a 10x+ on the fund and a 2x"

Join VC Lab

VC Lab, the leading venture capital accelerator, empowers new and emerging managers worldwide to close ethical, high-performing funds in under six months. The program provides cutting-edge tools, expert mentorship, and a global network to raise more money in less time. Apply if you want to build a meaningful venture capital firm.

Apply Now
How do I start raising my first venture fund? What are the key considerations for becoming a Limited Partner?
How can I improve my emerging manager firm's deal flow? What strategies help attract institutional LPs?
How do I build a compelling investment thesis? What are best practices for portfolio management?
How can I differentiate my VC firm in a crowded market? What are the typical fund terms for emerging managers?