The Business of Venture Capital, 3rd Edition

18The Fundraising Roadshow

Roadshows — that humbling time for most VCs when they are not quite in charge, their ego is tamer, and no one feels omnipotent for those 12–18 months. For some, it's a walk in the park — though past performance may not guarantee future returns, it sure does guarantee short fundraising cycles. For the less fortunate ones, the roadshow turns out to be worse, a “shitshow,” as one GP woefully described it.

OVERVIEW: THE FUNDRAISING PROCESS

The process begins with researching LP targets, developing a short list, kicking off the roadshow, and correcting course, as needed. See Exhibit 18.1.

Having a data room ready, with all the relevant fund documents (see Exhibit 18.2), can accelerate the fundraising process. Build a target list of investors, screen for a suitable fit, and get going. The journey is long and hard, and, unfortunately, the world of LPs has very few innovative and entrepreneurial thinkers who can take meaningful risks on emerging fund managers.

GETTING IN THE LP DOOR

Most institutional investors typically see anywhere from 200 to 600 funds each year. With such a high volume, the best way to stand above the ambient noise is to begin a relationship through an introduction. Without a warm introduction, fund documents that come in the door often head for the trashcan. Institutional investors often like to take it slow and warm up to a new fund manager over time, cautiously observing the fund's evolution and performance. G. Thomas Doyal, managing ...