Top 10 Fundraising Tips for VC Fund Managers 💡
Read time: 6 min
Raising funds with Climentum Capital has provided me with a lot of valuable lessons in a lot of unexpected ways.
Here is my top 10 fundraising tips for VC managers:
1. Build an Execution team, not a Fundraising Team
Here is a truth. Most VC Partner Teams are over-indexed on Fundraising.
The classic mistake is to assemble a team of fundraisers and leave very little room to deal-hunters. Unfortunately, it’s shortsighted and will probably backfire 💣
To play the long game, prioritize assembling a team that can do more than just fundraising. Things like:
✅ Entrepreneurship skills
✅ Due diligence
✅ Deal hunting
✅ Tech assessment
This will make you more complete, operationally sound, and better at sourcing amazing deals (which is the name of the game in VC 🎯)
2. Dare more!
The VC landscape is FILLED with non-daring funds... As a founder, I was always shocked by the lack of risk-taking of most fund managers. I thought my vision was biased and influenced by my perception of being on the other side of the table.
Now, as a fund manager, I can definitely testify that it wasn't bias, it's a FACT. Particularly true in Europe.
That explains why most funds would rather invest in software and SaaS than in hardware and tackling the most important problems…
3. Truly Differentiate
Differentiate and build a category of one. Find uniqueness in what you do: your brand, your deal flow, your content marketing, your value add to founders, your LP backing, the events you put together, the unique deals you find, and your niche or sub-sector specialization.
There are already a ton of generalist Climate Tech VC funds. It's time to specialize and differentiate. Otherwise, you'll be left behind. LPs have definitely heard your story before 🔁
4. Reduce your fund size and launch more quickly
In 2022, most climate funds targeted $100-150m as the total fund size for Fund I. But that was in the midst of euphoria 🎢, with money being thrown around to find alpha.
Times have changed, the tap is half-closed🚰, LPs have put on their conservative hats, and it's a lot more challenging to fundraise.
So, consider launching with a leaner fund:
🤝 It’s easier to build a track record
🤝 Simpler decision making
🤝 Potentially higher returns
🤝 More flexibility
5. Build genuine relationships with Limited Partners (LPs)
I’ve heard this repeatedly from Fund Managers, it takes YEARS to get anchor LPs onboard and solidify your relationships until they’re ready to pull the trigger.
Focus 80% of your energy in securing them, and building proximity, not chasing new ones. Showcase your dealflow pipeline, your thesis, why you think like great fund managers.
6. Build a core LP base with HNWIs
Yes, juicy $5 to 10M institutional checks are attractive and can lure you into the wrong fundraising strategy.
Don’t get seduced by the big dollar figure. Focus on what’s attainable and trust me there’s no better solid base than HNWIs that value you for who you are, buy into your strategy and want to back you to be part of the story.
Let’s face it, they are doing it for themselves, not for you. When they’re onboard is because they find your project sexy and super cool. Play that card and build a solid HNWIs base to get your first millions.
Trust me it’s much easier that way, instead of going for the big institutional fish, particularly in today’s environment.
7. Build a STRONG and DIFFERENTIATED brand
VCs have a weird relationship to branding. They often get attracted by flashy teams and brands, but they don’t put any effort in it for themselves.
The truth is that LPs are not immune to well-oiled marketing and solid brands. If anything they are massively influenced by what shines 🌟
8. Marketing is a powerful and under-appreciated weapon
“The business world has two—and only two—basic functions: marketing and innovation.” — Peter Drucker.
Many VCs are all in on the latter but skip over the former 🤦
Allocate budget towards marketing and get creative! Experiment with a strong visual identity, an SEO website, podcasts, blogs, social media, PR launches…
If they don’t hear about you, you don’t exist 💀
9. Learn. Hustle. Level Up. Repeat!
Smaller funds = smaller management fees. For example, a $10m fund will only be able to draw $200k/year, which should be spent on critical expenses like team salaries, legal bills, admin, closing deals, etc.
So, it’s time to hustle.
I've had to adapt numerous times: creating my own website, studying EU law, cracking content writing, building the perfect VC stack... A little bootstrapping never hurt anyone 💪
10. Find TRUE legal partners that will share risk
…Because those bills can get out of hand real quick. I’m talking $200-500K at first close 💰💰💰 (and let’s be real, none of us first-timers can afford that).
Find a good, trustworthy legal advisor, build a relationship with them, and then suggest a win-win scenario:
👨💼 You’ll go back to them for all deals over the next 10 years (or even the next 20 years if things work out) if…
🧑⚖️ …They wave their fees and share the risk until first close
This means you pay nothing until your first capital call, and if you fail to raise, then the legal firm bears the cost.
Don’t worry: they’re PE and VC law firms! They understand risk-taking.
Conclusion
Raising your VC fund is REALLY hard. In my opinion, it's harder than raising for a startup.
Why?
Because startups can showcase progress (prototype, proof of concept, early traction…), whereas wannabe Fund Managers can only showcase PowerPoint presentations and their wild sales pitch.
Your project doesn't really exist until the official launch at first close.
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