Zero to
Fund One

As Head of Admissions at VC Lab, a venture fund accelerator in Silicon Valley, I talk to hundreds of aspiring managers a year about their fund plans. Over time, clear patterns of failure and success have emerged. Below are ten mistakes to avoid and seven questions to answer before you start a fund. Get these right, and you’ll simplify your plan and be ready to master fortune.

Mistakes to avoid:

• Thinking too broadly: A label like “climate tech” or “the Midwest” is a starting point, not a thesis. It doesn’t answer the real question: what do you know about these deals that other investors don’t? Your thesis should be so specific and exclusive that only you could have written it.
• Lacking clear value: Everyone likes to say they add value, yet few can point to tangible results they delivered. Start by tracking what you’ve already done for founders in your space. That record shows ambitious founders how you’ll help them win big, and shows LPs your edge.
• Marrying for convenience: A fund is a ten-year marriage, and divorce gets ugly. Don’t choose partners to fill skill gaps. Choose someone you enjoy working with, who believes in the thesis as much as you do and will still be excited eight years in. If you can’t find that person, go solo and bring in venture partners to help with deals.
• Asking too much: Raising $100M sounds impressive until you miss the mark, which can disappoint your LPs and kill your next fund. Fund size is an output, not a target: pick a small number you can hit, then beat it.
• Planning for one fund: The purpose of your first fund is to help you get to your next fund, not to support your lifestyle for a decade, which is how fund targets balloon. Plan to raise a new fund every two years, and soon several funds will be covering your costs.
• Reserving for follow-ons: Conventional wisdom says to reserve up to a third of the fund for follow-ons. In fund one, that’s just a recipe for a longer raise. You’re better off writing first checks only and helping your LPs double down on winners through side vehicles.
• Chasing big names: A university endowment or pension fund looks great on paper, but most can’t back first funds by charter, and the few that can will tie you up in red tape that may cost you deals. Treat your first fund as a proof of concept: raise a small amount quickly from people who trust you and start building your track record.
• Selling to strangers: If you’re not comfortable raising from people you know, you shouldn’t start a fund. LP intros and public marketing are no shortcut, and broadcasting your raise can break securities rules. Your fund is an exclusive opportunity: you’re the prize, and only people connected to you get access.
• Hiding behind a deck: The best managers don’t lead with a deck because they know that it turns a conversation into a sales pitch, and nobody wants to be sold. Talk through your idea with people you trust and ask for their feedback. Save the deck for after they say yes. You’re not pitching, you’re enrolling.
• Taking too long: A first raise takes 250–500 conversations. You can’t cut that number, only the time it takes. Starting part-time is fine, but be ready to go full-time as soon as momentum picks up. Your LPs are betting on you. Bet on yourself first.

Deal flow questions:

• Access: What network are you part of that most investors can’t join? Name a founder you met there before they raised.
• Blind spot: What do most investors miss about the founders you want to back that will be obvious in five years?
• Value: In the last year, how many founders came to you for help? What tangible win did you deliver: a hire, a customer, a round?

Fundraising questions:

• Commitment: Are you and your partners equally obsessed with your space, enough to go full-time once momentum picks up?
• Patrons: How many people you know have backed a startup or fund before? How many of them have seen you work up close?
• First close: What’s the smallest fund you could close in three months with people you already know?
• Sequence: What will fund one need to prove in two years for your LPs to back your next fund?

What next:

Book office hours: If you’ve answered all seven questions, send them my way. Long answers are no good, so keep it brief, and tell me where you need the most help. If you’re ready, we’ll find time to go deeper.