takes time, and first-time funds or recently established firms will struggle with this much more than more mature firms.
Another challenge is that of assembling an appropriate fund management team. Just as entrepreneurial management is essential to making smart portfolio investments, fund and venture firm management is key to successful venture capitalism. Creating a smooth structure within the venture capital firm, however, is easier said than done: As venture capitalists tend to be successful and intelligent, many of them have large egos and strong opinions. Particularly in smaller funds overseen by two or three partners, provisions often require unanimous agreement on investments, which can lead to tension f transactions are being sponsored but not approved by all managing partners. It's essential to build long-lasting partnerships: A fund can last for ten to thirteen years, a true test of personal and professional compatibility.
Explaining the Fund
When n fundraismg mode, the general partners typically explain the fund's goals by means of a presentation. Such goals are often easily explained, as they relate largely to financial concerns and a concrete business model. Other goals, however, may include obtaining a certain desirable type of portfolio investments. It is sometimes helpful to draw parallels between the fund's expected returns and the way in which the venture capitalist expects to accomplish them.
For a firm such as Funk Ventures, the key question for our general partners is typically whether to approach limited partners from a financial or social perspective. Many limited partners in our funds greatly support our philosophy, while others are solely investing for purposes of generating financial returns. Understanding the limited partner's financial objective and level of social responsibility is essential for Funk Ventures to explain the fund's goals in a manner that will convince the limited partner of their value and achievability.