BC STARTUPS
Saved by @zmbnski

1/ I feel like breaking some rules today. Let's get transparent and have an open discussion about management fees in VC to help other emerging managers. The standard fee structure is 2% the size of the fund every year for 10 years or the life of the fund.

#vc #startups #funding

 2/ This means if you are an emerging manager raising a micro/nano fund of let's say $10M, then you get $200K a year for operations. That $200K pays for legal, fund admin, accounting, expenses, and your salary. basically that 2% doesn't go very far

#vc #startups #funding
3/ This is in contrast to a larger fund, let's say $100M fund where 2% is $2M a year. This is why some LPs (those who invest in funds) are looking for smaller management fee which is unreasonable for micro funds which many diverse managers are raising

#vc #startups #funding
4/ Now at RareBreed Ventures we structured our fees to be 2.5% for the first 5 years and 1.5% for the last 5 years. This comes out to the standard 2% but front-loaded in earlier years

#vc #startups #funding
5/ This means when we hit our target of $10M (if you want to be an LP our min investment is 10K and you can go to https://t.co/dm6ywrNFnU). We'll have 250K for the first 5 years giving a little more cushion for operations and allowing me to bring on a hire

#vc #startups #funding
6/ That seemed like the best option for me because it still keeps the fees at 2% overall and we are essentially making the bet that in 3 years or so we'll raise fund 2 which will be larger (our goal is $50M)

#vc #startups #funding
7/ The important thing to note here is the raising of new funds every 3 or so years. in our case let's say we close a $50M fund with the standard 2% fees in year 4 of our fund 1. Then we will be getting fees from both fund 1 & fund 2 which make life easier

#vc #startups #funding
8/ To this point @Nivo0o0 from @ShrugCap gave me some of the best advice ever and I wish I had gotten it earlier in my fundraising journey

#vc #startups #funding
9/ Basically @Nivo0o0 suggested front-loading the management to 4% but then only taking fees for the first 4 year. This leads to lower fees over the full 10 years while giving you more money to work with when getting started

#vc #startups #funding
10/ His point with this is if you do what you say you will, you'll raise fund 2, and then you won't need the fees from fund 1 anymore. I think this is really smart and appealing to LPs because its less fees overall and more money for investments

#vc #startups #funding
11/ I'd love to hear other thoughts on this topic so we can educate other emerging managers.@Samirkaji @DSox @davidrgoldberg @ceonyc @chudson @johnhenrystyle @MyDailyPosts @Jai__Malik @jasonlk @roybahat @PDXStephenG @minal_hasan @dunkhippo33 @yoheinakajima

#vc #startups #funding

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3/ Your first 5 hires will be the difference between life or death. Choose carefully. Be picky. Many of the things we do at the company still are a result of those early hires' legacy. Have fun as a tight knit team. It will change & evolve as you get bigger so enjoy this moment.

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Led Zeppelin wrote “Rock And Roll” in 30 minutes.

The White Stripes, “Seven Nation Army”, 10 min during a soundcheck.

The Rolling Stones, “I Can’t Get No Satisfaction”, 40min.

Making a startup in 24 hours is perfectly fine.


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In comparison, I wrote @CryptoJobsList in 2 days. And it's way more meaningful than what I've been doing in my events startup for 2.5 years.

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A thread: 👇👇

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The blog resulted in 20% of their organic leads and 3x their leads
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1. Type with all ten fingers 10 days - 10 mins in the morning.

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You can learn it for free here:
https://t.co/ow2WTHrXBJ


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