{"id":722,"date":"2021-03-31T08:30:00","date_gmt":"2021-03-31T08:30:00","guid":{"rendered":"https:\/\/iqeq.com\/fr\/2021\/03\/31\/starting-successful-pe-or-vc-fund-how-score-home-run\/"},"modified":"2024-08-16T13:31:08","modified_gmt":"2024-08-16T13:31:08","slug":"starting-successful-pe-or-vc-fund-how-score-home-run","status":"publish","type":"post","link":"https:\/\/iqeq.com\/fr\/insights\/starting-successful-pe-or-vc-fund-how-score-home-run\/","title":{"rendered":"Starting a successful PE or VC fund: How to score a home run"},"content":{"rendered":"<section class=\"text-block standard-spacing  \">    <div class=\"container fade-in\">\n        <p>There is no doubt that setting up a first-time fund can be daunting. Moving out of your comfort zone, leaving your organization and setting up your own fund management business from scratch can cause even the most intrepid fund manager to think twice.<\/p>\n<p>Here are five tips to help you ensure your journey as a first-time private equity (PE) or venture capital (VC) fund manager is an enriching and successful experience:<\/p>\n            <\/div>\n<\/section>\n\n<section class=\"accordion standard-spacing\">\n    <div class=\"container\">\n                    <div class=\"accordion\">\n                                    <div class=\"accordion-item\">\n                        <div class=\"title\">\n                            <p>1. Assemble your A-Team<\/p>\n                            <div class=\"toggle\"><\/div>\n                        <\/div>\n                        <div class=\"expanded\">\n                            <div class=\"inner\">\n                                <p style=\"text-align: justify\">It is crucial that your team has a clear and attributable track record of not only leading specific types of deals, but of doing so as a team. Based on our own experience working with first-time fund managers, we at IQ-EQ believe that how your team collaborates will be a critical success factor. Investors want to see a team that has worked together in the past, and can work together going forward to produce specific results.<\/p>\n<p style=\"text-align: justify\">Make sure you have the details of the key deals you have led and can take investors through them in an elevator pitch. You must also give due thought and attention to which resource will perform which role at your new firm, as investors will ask questions about some of the roles and you should not be caught off guard.<\/p>\n                            <\/div>\n                        <\/div>\n                    <\/div>\n                                    <div class=\"accordion-item\">\n                        <div class=\"title\">\n                            <p>2. Have a stand-out investment strategy<\/p>\n                            <div class=\"toggle\"><\/div>\n                        <\/div>\n                        <div class=\"expanded\">\n                            <div class=\"inner\">\n                                <p style=\"text-align: justify\">For a new fund trying to make its mark, having a clear and differentiated investment strategy is vital.\u00a0We would recommend that you avoid a \u2018generalist\u2019 fund since it may struggle to stand out in a crowded market where many funds are competing for attention from the same investors.<\/p>\n<p style=\"text-align: justify\">While a traditional investment strategy has consisted of four main elements (geographies of focus, sectors of focus, size of investment targets and degree of control given to investors),\u00a0as the industry has developed, PE funds have increasingly begun to describe investment strategies from a thematic perspective. For example, investing in sustainable activities, or disruptive trends such as cloud computing and artificial Intelligence.<\/p>\n<p style=\"text-align: justify\">Closely complementing the investment strategy, you should utilize fund terms that appeal to investors. Offering discounted fee terms that deviate from the standard \u20182 and 20\u2019 management fee and carried interest with an 8% hurdle will entice potential investors to commit to your fund. LPs will also expect to see details of co-investment rights and they particularly look out for signs that the management team is putting skin in the game.<\/p>\n                            <\/div>\n                        <\/div>\n                    <\/div>\n                                    <div class=\"accordion-item\">\n                        <div class=\"title\">\n                            <p>3. Pick a structure that suits investors<\/p>\n                            <div class=\"toggle\"><\/div>\n                        <\/div>\n                        <div class=\"expanded\">\n                            <div class=\"inner\">\n                                <p style=\"text-align: justify\">Keep investor requirements front of mind when determining the best structure for your fund. We recommend you pick a simple structure that can be easily explained and clearly demonstrates its adherence to investor requirements.<\/p>\n<p style=\"text-align: justify\">Regarding the size of the fund, this will primarily depend on the type of investments being made. For instance, an SME fund makes smaller investments, so $100 million may be sufficient capital, whereas an infrastructure fund with more expensive investment targets might need as much as $1 billion.<\/p>\n<p style=\"text-align: justify\">Don\u2019t forget that investors have minimum subscription sizes and maximum percentages of a fund they can invest into \u2013 so if the fund is too small they may not be able to subscribe. At the very outset, you must balance the size of the fund with your need to attract investors.<\/p>\n                            <\/div>\n                        <\/div>\n                    <\/div>\n                                    <div class=\"accordion-item\">\n                        <div class=\"title\">\n                            <p>4. Choose the right home for your fund<\/p>\n                            <div class=\"toggle\"><\/div>\n                        <\/div>\n                        <div class=\"expanded\">\n                            <div class=\"inner\">\n                                <p style=\"text-align: justify\">When choosing a domicile for your fund, keep it simple. Domicile decision-making can depend on a range of factors, such as the reputation of the jurisdiction, investor sentiment, set-up timelines and processes, regulations, costs and quality of local service providers. No jurisdiction will be able to lay claim to being the right home for every fund.<\/p>\n<p style=\"text-align: justify\">While in recent years, some of the more popular jurisdictions for fund structuring have been Delaware, Cayman, Luxembourg, Ireland and Singapore, it appears increasingly clear to market observers that factors such as economic substance are likely to be at the forefront of managers&#8217; domiciliation decision-making going forward.<\/p>\n<p style=\"text-align: justify\">In addition, it is recommended to consult with a tax advisory professional to ensure you are domiciling and structuring your fund in the proper way to avoid any harsh tax leakage.<\/p>\n                            <\/div>\n                        <\/div>\n                    <\/div>\n                                    <div class=\"accordion-item\">\n                        <div class=\"title\">\n                            <p>5. Perfect your pitch for the fund-raising process<\/p>\n                            <div class=\"toggle\"><\/div>\n                        <\/div>\n                        <div class=\"expanded\">\n                            <div class=\"inner\">\n                                <p style=\"text-align: justify\">It is easy to underestimate the time, cost and effort involved in the exercise, but fund-raising can be a long and challenging process. At IQ-EQ, we know of clients that have had over 400 meetings to secure their first fund of around 40 investors. With this in mind, the best way to get a head start on fund-raising is to perfect your pitch. We would recommend that you practice pitching your fund to other members of your team to identify strengths and weaknesses and build consistency in your narrative.<\/p>\n<p style=\"text-align: justify\">Next, consider whether to appoint placement agents, who are industry specialists in raising capital from private wealth and institutional investors. The challenge, of course, is that most first-time funds are seen as a risky proposition by placement agents,\u00a0Also, placement agents might seem expensive, often charging as much as 2% of capital raised plus expenses and other fees. To avoid putting off placement agents or being charged higher fees than you are willing to pay, ensure that your documentation and materials are high quality and that your proposition is clear, compelling and easy to grasp.<\/p>\n<p style=\"text-align: justify\">Finally, to avoid investing more time and money in fund-raising than is justified, keep in mind that fund closings are expensive and time consuming. We recommend that you try to limit the number of closings that you have to three or four.<\/p>\n                            <\/div>\n                        <\/div>\n                    <\/div>\n                            <\/div>\n            <\/div>\n<\/section>\n\n<section class=\"text-block standard-spacing  \">    <div class=\"container fade-in\">\n        <h4 style=\"text-align: justify\">Scoring that home run as a first-time fund manager: a team effort<\/h4>\n<p style=\"text-align: justify\">Ultimately, while you may have in-depth experience in a few aspects of managing a fund, the all-round expertise needed across all aspects of fund management \u2013 not to mention the various steps involved in setting up your own business \u2013 means that the process might prove more challenging than can be reasonably factored in at the outset.<\/p>\n<p style=\"text-align: justify\">As such, selecting the right partners to support you on your journey is a key element for first-time and fledgling fund managers to succeed \u2013 not only in launching their first fund, but in paving the way for future funds as well.<\/p>\n<p style=\"text-align: justify\"><strong>The IQ-EQ Group, including Blue River and Constellation in the United States, has extensive experience providing first-time fund managers with the guidance and support they need when launching their first fund.\u00a0<\/strong><a href=\"https:\/\/iqeq.com\/funds\" target=\"_blank\" rel=\"noopener\"><strong>Click here to find out more about IQ-EQ\u2019s comprehensive range of fund services<\/strong><\/a><strong>.<\/strong><\/p>\n            <\/div>\n<\/section>\n\n    <section class=\"related-section related-section--people related-section--centered standard-spacing\">\n        <div class=\"container\">\n                            <h2>Meet The Authors<\/h2>\n                        <div class=\"cards row-load\">\n                    <div class=\"person-card\">\n                    <div class=\"bg-img lozad normal\">\n                <img width=\"290\" height=\"192\" class=\"attachment-person_card size-person_card lozad\" alt=\"\" data-src=\"https:\/\/iqeq.com\/fr\/wp-content\/uploads\/2023\/04\/Derrick-Green-formal-Grey-290x192.jpg\" \/>            <\/div>\n            <div class=\"bg-img lozad hover\">\n                <img width=\"290\" height=\"192\" class=\"attachment-person_card size-person_card lozad\" alt=\"\" data-src=\"https:\/\/iqeq.com\/fr\/wp-content\/uploads\/2023\/04\/Derrick-Green-informal-Green-290x192.jpg\" \/>            <\/div>\n                <div class=\"info\">\n                            <h3>Derrick Green<\/h3>\n                        <p class=\"job-title\">Co-Head Fund Administration, U.S.<\/p>\n            <div class=\"border\"><\/div>\n                            <p class=\"location\">United States<\/p>\n                        <a href=\"#contact-person\" class=\"link link--deepgray email\">\n                Send email            <\/a>\n                            <a href=\"tel:+12149960997\" class=\"link telephone\">\n                    +1 214 996 0997                <\/a>\n                                            <\/div>\n    <\/div>\n    <div class=\"person-card\">\n                    <div class=\"bg-img lozad normal\">\n                <img width=\"290\" height=\"192\" class=\"attachment-person_card size-person_card lozad\" alt=\"\" data-src=\"https:\/\/iqeq.com\/fr\/wp-content\/uploads\/2023\/04\/Jordan-Rothberg-Formal-Grey-290x192.jpg\" \/>            <\/div>\n            <div class=\"bg-img lozad hover\">\n                <img width=\"290\" height=\"192\" class=\"attachment-person_card size-person_card lozad\" alt=\"\" data-src=\"https:\/\/iqeq.com\/fr\/wp-content\/uploads\/2023\/04\/Jordan-Rothberg-informal-Green-290x192.jpg\" \/>            <\/div>\n                <div class=\"info\">\n                            <h3>Jordan Rothberg<\/h3>\n                        <p class=\"job-title\">Head of Sales, Fund Administration, Americas<\/p>\n            <div class=\"border\"><\/div>\n                            <p class=\"location\">United States<\/p>\n                        <a href=\"#contact-person\" class=\"link link--deepgray email\">\n                Send email            <\/a>\n                            <a href=\"tel:+19293887934\" class=\"link telephone\">\n                    +1 929 388 7934                <\/a>\n                                                    <div class=\"socials\">\n                    <a href=\"https:\/\/www.linkedin.com\/in\/jordan-rothberg-1202b946\/\" class=\"linkedin\">\n                        <span class=\"screen-reader-text\">LinkedIn<\/span>\n                    <\/a>\n                <\/div>\n                    <\/div>\n    <\/div>\n            <\/div>\n            <div class=\"button-wrapper\">\n                            <\/div>\n        <\/div>\n    <\/section>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":11,"featured_media":713,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1],"tags":[],"expertise":[12],"service_category":[],"class_list":["post-722","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Starting a successful PE or VC fund: How to score a home run | IQ-EQ France<\/title>\n<meta name=\"description\" content=\"There is no doubt that setting up a first-time fund can be daunting. 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