Venture Capital Jobs & Tips To Break Into VC - 09
How the Venture Capital Fund Cycle Works? - VC Trademill
Hi👋 VC Crafters, Welcome to today’s VC Crafter’s - Weekly Break Into VC Newsletter. Every week I shared my experience tactics and tips to break into VC and VC Job opportunities. In today’s newsletter, will dive into:
Today At A Glance:
Deep Dive: How the Venture Capital Fund Cycle Works? - VC Treadmill
Today’s VC Jobs & Internships: From Scout to Partner
Must Read on Startups & Venture Capital
What’s Going On: Inside VC Crafter Slack Community.
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TODAY’S DEEP DIVE
VENTURE CAPITAL FUND CYCLE & VC TRADEMILL
"Let's understand the whole process of building a VC Fund and how the VC fundraising cycle works.
Raising capital for a VC fund is often tougher than for a startup.
PS. As a future VC, you will be doing one of the most hardest thing….. raising VC fund,
General Partners (GPs) spend 2-2.5 years securing funds from Limited Partners (LPs), including HNIs and Family Offices. Even for smaller amounts, the duration remains the same.
It involves The Two-Stage Fundraising Process:
The VC fund cycle involves two stages - the first close and the final close. In the first 1-1.5 years, GPs aim for 40-50% of the total targeted funds. The remaining capital is raised in the subsequent 1-1.5 years, leading to the final close.
But what after the first raise (40%-50% of decided raised capital) - Does VC start to invest in startups / start to charge Management fees OR wait to raise the rest of the money and then start the investment? :bulb:
Generally, after First Raised, VCs start to invest in the startups over the commitment period which is about 3-5 years. In the Commitment period - VCs will do investment in 10-15 new startups (depending on investment strategy).
Simultaneously, VCs begin charging management fees over the fund's lifespan. These management fees usually amount to around 1.5%-2% annually.
“But till the first raised - the VC business worked kind of a bootstrapped startup.” :male-construction-worker:
The commitment fund is designated for investing in new startups. but, once the commitment period end, VCs no longer able to make new investments. Instead, they shift their focus to follow-on investments, which typically occur around two years after the commitment period. :man-gesturing-ok:
The follow-on investment phase extends from the initial fundraising to approximately 7-8 years into the fund's lifespan. During this period, follow-on investments are made in the startups that were previously invested during the commitment period.
Typically, VC funds are organized into Fund I or Fund II. Fund I is formed by combining the capital raised during the first and final raises.
However, once the commitment period concludes, VCs are unable to invest in new startups. To avoid being unable to invest in fresh startups, VCs initiate the process of raising funds from Limited Partners (LPs) for Fund II.
Fund II fundraising usually begins before the end of the 1-1.5-year commitment period.
This cycle of raising funds and deploying them into startups forms what is known as the VC Treadmill, where VCs continuously seek new funds to sustain their ability to invest and support startups.
VC Treadmill:
Raised Fund → Deployed in startups → Raised Fund → Deployed in startups
The primary responsibility of raising funds from LPs in the VC business primarily falls on GPs or MDs. It is the GPs and MDs who handle investment decision-making, fund operational activities, fundraising efforts for new funds, providing support to portfolio startups, and presenting the fund's performance to LPs.
Individuals working in the VC industry can envision the extensive workload involved in these tasks, which encompass a wide range of responsibilities to ensure the success and growth of the fund.
That’s it. I hope you are able to understand the lifecycle of a VC fund and the most common terms used in VC Fundraising.
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VC JOB OPPORTUNITIES
Today’s Venture Capital Jobs & Internship
MBA Summer Associate - Emerson Collective | USA - Apply Here
Associate - Leran | USA - Apply Here
Associate - NextGen Venture Partner | USA - Apply Here
Senior Investment Associate, India - B Capital | India - Apply Here
Senior Associate, Blue Ivy & Nassau Street - Alumni Venture | Apply Here
GP - Outside VC | USA - Apply Here
Associate / Senior Associate - Millennium Technology | USA - Apply Here
Investor Relations Manager - Frontline | UK - Apply Here
Investment Associate -Neo | USA - Apply Here
Associate - Frontline | UK - Apply Here
Intern - France | France - Apply Here
Investor Relations Manager - Cusp Capital - Apply Here
VC Intern - Muse Captial | US - Apply Here
Marketing Manager - Struck Capital - USA - Apply Here
Senior Associate -B Capital | India - Apply Here
Principal / Growth Manager - Real Tech Holdings | Singapore - Apply Here
Intern- Investor Relations - Krystal Venture Studio| India - Apply Here
VC Intern -Riverwalk Holding | India - Apply Here
Financial Analyst - Sentiem | UK - Apply Here
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MUST READ ON VENTURE CAPITAL
This Weeks Read On Venture Capital
Deep Dive: Artificial Intelligence by Chamath Palihapitiya Read Here
NVIDIA received the First Cheque from investors Only for three reasons by NVIDIA CEO. Read Here
Exploring macro and strategic trends in the tech By Benedict Evans. Read Here
One Type of Founder Investors Hate Funding Read More
TAM - that's Totally A Made Up Number. Read More
Don't track LTV/CAC; Instead track LTV/CACD, Why? Read More
INSIDE THE SLACK COMMUNITY
Sharing few updates on what’s happening inside our VC Crafter Slack Community.
Daily Discussion: discussion on IRR vs VC multiples, VC fund cycle, VC financing instruments and more..
Weekly Community Work: Working on writing investment memo from real pitch decks and present in front of community or 1:1 discussion call.
Ecosystem Events Announcement: Financial Modelling - 101, Collaboration with Mcgill venture for break into VC event, VC Legal Basic and more..
Want access to all these: Join our 200+ VC Enthusiast Community - VC Crafters To Learn, Network, Collaborate & Craft Path To Venture Capital.
That’s it for today!
✍️Written By Sahil | Join VC Crafter Community
Just finished reading this, the information is definitely worth subscription. Bravo