How To Set Up A Venture Capital Fund: A Quick Start Guide to Launching Your VC Fund Right Now and Preparing for Institutional Scale and Success

By Winter Mead

There are lots of books about how to invest in venture capital. There are few books focused on what it takes to set up the behind-the-scenes business to position you for being a successful venture capitalist. To be a successful venture capitalist, you must set up a strong foundation for your business, inc

• Language: English
• Publisher: Winter Mead
• Release date: Jun 1, 2024
• ISBN: 9798990772632

Book preview

How To Set Up A Venture Capital Fund

A Quick Start Guide to Launching

Your VC Fund Right Now and Preparing

for Institutional Scale and Success

Winter Mead

First Edition

How To Set Up a Venture Capital Fund

Copyright © 2024 by Winter Mead.

All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

Winter Mead, San Francisco, CA

How To Set Up a Venture Capital Fund / Winter Mead. —1st ed.

Trade Paperback: 979-8-9907726-0-1

Hardcover: 979-8-9907726-1-8

Audiobook: 979-8-9907726-1-8

eBook: 979-8-9907726-2-5

To my family, in particular Danesha and Jude,

who've supported another effort on the writing front

Contents

Why I wrote this book

Definitions

What is venture capital?

What is a venture capitalist?

What is a venture capital fund?

What is a venture capital firm?

What is the difference between a venture capital fund and a venture capital firm?

Introduction: what is the scope of this book?

What is involved in setting up a fund?

Who is responsible for setting up the venture capital fund?

Steps in setting up a venture capital fund

Ranking the importance of each step in setting up a venture capital fund

Perspectives on setting up a venture capital fund

Two main perspectives: the venture capitalist and the limited partner

The framework of this book

The three phases of setting up a VC fund

The core functional areas covered in this book

How do the core functional areas fit into the three phases of setting up a VC fund

Phase 1: Setting up the basic functions required for your venture capital firm

Unit 0. Basic legal, banking, and finance

Unit 1. Cloud Provider

What it is, why you should have it, when and how you should implement it, who sets it up, and whether an IT consultant should be considered

Unit 2. Telecommunications

Implementing telecommunications and who is responsible for setting it up

Unit 3. The Customer Relationship Management System

Unit 4. Investor Relations: Marketing and Sales

Investor relations is an essential function for a VC and should be set up early

Phase 2: Setting up the basic functions of your venture capital fund

Basic functions of your VC fund and the core service providers needed to run it.

Unit 5. Legal considerations related to a VC firm

Unit 6. The Who, What, Why, When, and How of VC Funds and Banking

Unit 7. Fund Administration and its Purpose

Unit 8. The Importance of the Tax Function

Phase 3: Additional functions that support growth to becoming an institutional firm

Unit 9. Functions expected by Institutional Limited Partners, including the audit

Unit 10. Other considerations when setting up your venture capital fund

Compendium: Key Take-aways

Epilogue: What This Book Is…  and What It Is Not

About the Author

Why I wrote this book

In 2021 I published the book How To Raise a Venture Capital Fund, which serves as a guide to venture capitalists (VCs) to help them understand how to raise money from their investors, called Limited Partners (LPs). Afterwards, having spoken with hundreds of VCs who read it and were actively building funds of their own, I noted a key knowledge gap: many VCs are still struggling with how to set up their VC firms the right way from Day 0.

Even as software now allows entrepreneurs to independently manage a fund, and specialized service providers are available to support these operations, a gap still exists in understanding how to set up a fund properly. This includes seeing the big picture, identifying the various functions required for a fund and when to build them, and understanding who, ultimately, should be responsible for these functions. This process can take months or even years to understand, time that could be better spent building your firm. 

This book is for venture capitalists looking for the information they need to move faster and more efficiently in growing their VC firm.

While there are many books on how to invest, there are actually very few that directly address how to set up a venture capital fund. One of the most difficult stages of