Getting Started: Start Small with Friends and Family

Short Description:
- In order to get started as a GP, another strategy is to find people willing to back a small fund of less than $10mil perhaps even as small as $1mil or so. If one is trusted by high net worth individuals, this can be a way to build a track record without having to put in as much as the angel strategy.
Benefits:
- As this is more formalized than Fund Zero, it can provide practice on the structure and discipline of fund formation and reporting.
- Starts the discipline of LP relationship building and depending on the selection of initial LPs may lead to more.
Trade-offs:
- For most GPs, the initial LPs are unlikely to be able to be anchor LPs for future funds. Many high net worth individuals may do an initial venture fund without planning for another allocation in 2 or 3 years to the same manager. And many will not be able to grow that allocation with the growth of the fund.
- GP is unlikely to earn much in management fees (perhaps none) and therefore should expect to live off savings or other income.