Fundraising for VCs: Achieving Success in the Pre-Seed Stage

I was talking with a new emerging fund manager recently about his fundraising. He was surprised and floored by how his past investing track record didn't really matter to LPs.

Weird right? Some thoughts >>

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

1) In so many ways, the fundraising process for VCs is quite akin to the fundraising process for founders.

At the "pre-seed stage, both funds and companies alike have basically nothing to show. No brand. No customers. No product. No revenue. Etc.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

2) Investors for startups and funds want to know how can you repeatably make money? What is the path to this?

The problem is that you have nothing to show on this new co -- even if you made money before -- it doesn't matter, because this is a new company & a new brand.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

3) You don't get to take all the hard work you put into a past company to this new one. You have to start from scratch.

Or at least -- this is how a lot of investors - both LPs and VCs - see it.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

4) This is why both startup and emerging fund manager decks are well-served to have go-to-market slides in their decks.

I've talked about this here: https://t.co/aQ6vySObgK

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

5) The other issue that emerging fund managers face is differentiation.

Just like how startups often get told a space is too competitive, the VC landscape has 1000s of emerging fund managers.

So how do you stand out?

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

6) The reality is that it's just easier for a would-be LP to pass if they don't already know you, because it would take too long to understand how you're different from other funds unless it's clear in the first minute.

The #1 way to stand out IMO is to create content.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

7) Content lets would-be investors understand quickly:
-who you are
-what you believe in
-what sorts of things you invest in
-your thesis
-how you think about strategy
etc...

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

8) But I get it.

Emerging fund managers (and startups) feel like they have no time to create content. I thought that too.

My hack here is to pick the medium that is quickest for you - just to get thoughts out there in < 20 min per day.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

9) Some channels that I find quick:
-tweet threads
-LI posts
-Loom videos

All of these channels are pretty time-boxed or space constrained.

If you do this 20 min a day, you will generate a BOATLOAD of content that you can even organize into an FAQ on a document or a website.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

10) FWIW, a lot of content generators -- whether startups or emerging fund managers -- have a much easier time fundraising than others.

A lot of our LPs came inbound from our content for funds 2 and 3.

It is worth it to put in the work.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023

11) It also shows that you have the ability to start to build an audience -- of customers for your startup or dealflow for your fund, which is a form of a go-to-market strategy.

— Elizabeth Yin 💛 (@dunkhippo33) June 29, 2023