5 lessons we’ve learned from building a venture fund from scratch • TechCrunch

This month we are five years from building Opacne. Along the way, we’ve raised hundreds of millions from some of the world’s leading institutions and have been lucky enough to back startups like Ramp, Anduril and many more.

But just like the stories of the startups we are behind, this journey has taught us many lessons.

I’ve been thinking about our history as we reach this milestone, and I wanted to share a few things I wish I had known five years ago.

Early logos are important

One of the few regrets is that we didn’t go looking for the logo sooner. We didn’t chase hot companies that led the round led by well-known firms. Instead, we stuck to our knitting on Fund I, leading rounds in startups and teams we believed in and acquired through our own infrastructure. I was under the impression that if we did exactly what we said we were going to do – lead the rounds, support great talent, bring a unique model to market – we would excel.

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It turns out that when you’re building a risky business from scratch (limited results, haven’t worked in the business before, etc.), logos matter. They are important to potential LPs who use them as a proxy for access; they are important to your peer group, who use them as a proxy for your sharpness; and they matter to founders, who immediately head to your website to find out if you’ve backed startups.

When starting a venture fund, you should expect that within 3-4 years you will barely understand if you are competent for the task.

Fast forward to today. Ironically, according to Cambridge Associates benchmarks, our Fund I is one of the best in its class. But that feat took five years to blossom, making it difficult to raise Fund II. An LP once asked me, “Have you invested in any startups I’ve heard of?”

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It’s long gone, but I have no doubt that logo hunting would have saved us time in the early years.

Reputation is critical

In an industry where your reputation and brand are the most important part of building a business, it’s important to start from scratch. Early logos are just one piece of the puzzle.

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Invest heavily in building meaningful relationships with respected partners, founders and LPs. Send them relevant, high-quality offers for free; become friends on Twitter; go to events; co-invest in companies; and cold email them and grab a coffee. Do whatever it takes because relationships are a currency in more ways than one.

For example, one of the main ways LPs evaluate you and your fund is by aggressively checking references with their existing VCs. They will ask if partner X has heard of you, worked with you, and would bring you into the deal.

It requires minimal brand awareness and ideally involves years of working together and achieving stellar results. The best way to build a reputation is to send offers to investors that will ultimately make them a lot of money.


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