How to Raise Your First Fund-in conversation with Green Cow Venture Capital’s Vikram Lakhwara

Part 2: Fund, Thesis & Pitch Deck


Theron McCollough

3 years ago | 8 min read


  1. There are about 900 micro VCs in the market representing demand for ~$20 billion in capital commitments every 2–3 years. Set yourself apart with 1) thesis-driven conviction and alignment 2) differentiated deal flow and access to founder communities, and 3) added value beyond the check.
  2. Right now, over 358 emerging and micro-VC managers are actively raising a new fund. Craft your thesis and fund from your passions and experiences to handhold LPs down the path you’ve walked that proves you have a unique position or lens to evaluate and invest in talent.
  3. Micro VCs raise anywhere up to $100M. Model, model, model to show what you could and can deliver, and then execute.

This series is here to help first-time and emerging managers raise their first fund. In my last article, I shared how to anchor yourself in the VC ecosystem, leverage your network and reputation, and surround yourself with a team of great people building great things.

This time, I spoke with Vikram Lakhwara of Green Cow Venture Capital (GCVC) about the pitfalls and lessons learned when developing your first fund and crafting your thesis. Prior to GCVC, Vik was a consultant to Fortune 500 and Global 2000 companies at Reinventures, venture capitalist at SK Telecom Ventures, and ran business development and partnerships of Startups & Venture Capital practice at Wilson Sonsini.

In 2018, Vik and his partner, Maggie Sprenger, founded GCVC, a seed-stage fund backing dynamic founding teams leveraging deep tech to disrupt traditional, global sectors.

There have already been over 5000 deals in the first half of 2020 in the US in dozens of sectors. How do you know where to focus your fund? And how can your vision convince investors and startups to join your first fund, second, and beyond?

Read on to learn how. Then follow @theron on Medium, LinkedIn, and Twitter to get notified of the next articles in the series on building relationships and converting leads, and managing your fund.

The Fund

As an emerging manager, should you focus on early stage or late stage investments? Which sectors? Geography? Check and fund size? There is no one size fits all answer for first-time managers, but there are indicators and considerations that can guide your decision.

Early Stage vs Late Stage

Photo by mauro paillex on Unsplash

Many first-time fund managers start with a small “Nano” VC fund of $5M to $25M. Typically they make 20–50 small investments in pre-seed or seed stage startups. It’s natural to try and start with early stage to prove — to yourself and investors — that you can identify greatness from the masses and nurture winners.

An early stage fund cutting many small checks can spread their capital around, reduce risk by diversifying, and capture — fingers crossed — early returns. However, the horizon for an early stage fund is 5–7 years, if not more, making it difficult to recoup enough returns to prove its success.

Many seed stage startups never make it to the next round and, if they do, those early returns can be incremental and take years to come to fruition. You would need to convince LPs to gamble both on you, the unrealized potential in your choices, and the massive upside potential within your portfolio.

On top of that, you still need luck.

Instead, you could start with later stage B and C companies. Late stage investments can produce returns that quickly build an impressive portfolio, allowing you to raise a second fund faster.

There is security in raising for later stage investments. Even so, these come with their own difficulties. The later stage the company, the larger the fund, and the larger the checks written. If you’re raising your first fund, odds are investors will expect a smaller raise.

They might try you at $5M as a proof-of-concept and get validation before writing bigger checks. Is that going to be enough to get a B or C stage company to the next level? A late stage first fund may work, but you will need a narrow thesis and strong inside connections to larger funds and their deal flow.

Use their name recognition and your access to qualified deal flow to convince LPs.

Sector & Geography

When it comes to sector and geography, it all comes down to your experience and foresight. How well do you know the trends and outlook for certain sectors within the economy? At GCVC that has meant identifying startups addressing inefficiencies and scarcities in recession resilient sectors.

Using their expertise, Vik and Maggie strive to invest in companies that will thrive even in eventual downturns.

Using your experience and knowledge, are you able to identify companies with potential? Maybe they won’t translate into returns now, but later. Growth in these companies will validate your choices.

The Principles

With all the choices and considerations above, there are still countless permutations for your first fund. So how do you set yourself apart? As Vik shared, it comes down to three factors:

1. thesis-driven conviction and alignment

“A mistake that some funds make early on is trying to build a fund around a set of investments, technologies or trends rather than build a fund around a thesis,” said Vik. He and Maggie started GCVC because of aligned vision and motivation when evaluating and investing in startups. It’s not enough to pick a hot sector and devise a fund to fit that thesis.

“A lot of people will have opinions on what to do or not do. LPs will tell you to be more narrowly or broadly defined. Define your true convictions and then formulate your thesis around that.”

2. real differentiated deal flow and access to founder communities

This goes back to what we discussed last article: Network. How broad and deep is your network? Show that you have the experience and connections to bring in high-quality, aligned deal flow.

3. a proven track record of value added

Established VCs have had an advantage in the past, but there is an opportunity for new funds that have the experience to provide key value add to specific sectors.

The amount of VC funds has increased, giving startups many funds to pick and choose from. First time funds can get investments more easily if they can bring exceptional, hands-on benefits to their portfolio companies. “Prove that you’ve not only created a fund,” said Vik, “but a community that can add value to the startups you invest in.”

Provide value beyond the check.

At Acceleprise, a narrow focus on B2B SaaS meant that we had the connections, know-how, and passion to help those in the accelerator. For GCGV that means building a collaborative community within their startups, but also making introductions and adding value wherever possible — even in startups they never end up investing in.

“When you act as a value add to entrepreneurs, you get a lot more traction amongst them. It is not just about getting a brand out there, it’s about building real relationships.”

Then — critically — draw a line connecting your conviction and experience to your fund alignment.

Vik stressed that it’s all about building a narrative and a conviction in that narrative: “if you don’t do that early on, you’re setting yourself up for failure.” Prove out your investment thesis and handhold the LP down the path you’ve walked to prove a unique position or lens to evaluate or invest in talent.

“Our work and life experience gives us not only a one-up on how you can evaluate talent but how you can provide value across different industry verticals.”

Similar to what we expect from founders and investors, be deeply passionate and have conviction about what you do and bring the experience and operational excellence to back it up.

Fund Size

Instead of a range, commit to a specific fund size. Be clear about what you need with LPs because the difference between $3M and $5M, $20M and $30M is significant. If your number keeps changing, it doesn’t inspire much confidence in LPs that you know what you’re doing.

When it comes down to the final number, if you aim for X and end up with less or more, it’s ok. Unlike startups where raising more than your goal will affect equity, funds operate on a sliding scale. If you raise more than anticipated, you can make more investments or recycle your returns and the percentage will get diluted among LPs. If you raise less, you invest less initially and use your first investments to convince more LPs.

It won’t make or break you unless you raise $0. Find the sweet spot where your fund can operate, prove out your thesis, and generate returns to put you in the right position to start raising for fund 2.

Pro tip: read the room and posture accordingly.
Instead of raising more than you stated, you could say “no.” But have a plan, and communicate with LPs, that when you raise your next fund, you will include them. Even though there’s no more room, entice these investors to come back later when you raise your second fund.

The key is to model, model, model. Vik urges any emerging managers to “be methodical and thoughtful about modeling not just fund size, carry, and fees but also # of companies, ownership, and stage with an understanding of power law dynamics and how much value needs to be created in order to achieve returns equivalent to the top decile of venture funds.

It’s important to model your fund, using software like fiifi Portfolio Insider, and then stick to it. “If you don’t follow your model,” Vik said, “LPs could just say you got lucky. LPs don’t commit capital based on luck.”

The Thesis

Now you need to take all the evidence and reasoning behind why you are the right person and present it to investors. Your thesis is a critical way of connecting the dots for investors.

A thesis is like a recipe.

What is your secret sauce and what ingredients do you have to make it just right? This includes timing, geography, fund size, who’s involved, advisors, team, and proprietary deal flow. On top of that, bring your conviction, powers of persuasion, principles and data to back it all up so that by the end of the meeting, investors believe in what you could and can deliver.

One of GCVC’s core principles is startup diversity, in terms of background, age, geography, etc. Vik and Maggie have supporting data that shows diverse teams have a higher likelihood of driving outsized returns to their investors.

By having a diverse team of their own, they are in a unique position to find those startups that leverage diversity of perspective in building scalable, customer-focused solutions.

If you don’t know where to start, you can build an initial thesis on fiifi. All you have to do is enter the basic information of your fund as a base. Then sprinkle on your secret sauce to make your thesis compelling.

Pitch Deck

Take those key pieces to your pitch deck. Your accomplishments, stats, advisors, and paper value of investments should all be up to speed in your pitch deck. That means iterate it as many times as necessary.

The majority of your initial investments will be made in the first few years, but the horizon for an early stage fund is 5–7 years. Once you’ve closed on your first fund, you need to start planning towards your second fund. Have a long term goal in mind because you can’t expect to get a return on your first right away. Managers typically take a 2% operating fee — how far will that get you?

In your pitch deck, make sure to include quantifiable stats like returns, IRR, TVPI, DVPI, and MOIC. A key indicator to leverage is who from your first fund is investing in your second fund. If an LP from your first fund is staying on, that’s a strong indicator that they still trust you and want to do more. If they aren’t, the next LPs will ask “why not?”

In addition to those details, also bring in intangible elements like your value add to founders. Whenever possible, try to quantify the intangibles. For example, GCVC used an NPS score to measure their value add.

What else do you want to learn about becoming an emerging manager? Follow me at @theron on Twitter and LinkedIn to read upcoming articles in the series on building relationships and converting leads, and managing your fund.


Created by

Theron McCollough







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