Ask HN: How to Start VC Fund?

#1

Post by Biba89 » Sat, Feb 04, 2023, 7:46 PM UTC

Looking at the VC funds in the last decade, it seems like VC investing needs a huge change. I have an idea for the innovative VC fund that could improve the success of investing and creating new unicorns. But, I don’t know how to start the fund. I’m serial entrepreneur with few exits and many failed startups, but don't have enough funds to raise the VC fund. Also, don’t have that good connections in global VC ecosystem.

My idea is simple and based on personal and my friends’ experiences. Create a VC fund with total fund of $1 million for the first round of investing in 10 entrepreneurs who passed few super detailed interviews with me or the team. All 10 entrepreneurs will get $10k every month for 10 months and they can test different ideas they have in this 10 months. Also, they can choose how they want to spend those $10k per month (paying themselves, hiring, paying ads if the need but not recommended, setting up company, etc.). Any suggestion or idea or process how to start this kind of VC fund?

Re: Ask HN: How to Start VC Fund?

#2

Post by amrb » Sat, Feb 04, 2023, 7:55 PM UTC

> Any suggestion or idea or process how to start this kind of VC fund?

Your gonna need to convince someone somewhere that the returns from the investment, are gonna be better than the interest rate of today, maybe that won't be a hard sell in the current economy either.

Re: Ask HN: How to Start VC Fund?

#3

Post by croatiancoder » Sat, Feb 04, 2023, 8:01 PM UTC

with this amount you'd probably be a follow-on investor even at the earliest of stages. 10 months isn't enough to see if an idea really has wheels

Re: Ask HN: How to Start VC Fund?

#4

Post by Biba89 » Sat, Feb 04, 2023, 8:18 PM UTC

croatiancoder wrote: post #3

with this amount you'd probably be a follow-on investor even at the earliest of stages. 10 months isn't enough to see if an idea really has wheels

I wouldn’t agree here, because my experiences showed me that in 1-2 months you can know if you are going in the right direction. Of course you can pivot later, but if I do customer research and interviews properly and execute fast with MVP that I can charge for, I can move forward or throw idea and focus on the next one.

Re: Ask HN: How to Start VC Fund?

#5

Post by Biba89 » Sat, Feb 04, 2023, 8:19 PM UTC

amrb wrote: post #2

> Any suggestion or idea or process how to start this kind of VC fund? Your gonna need to convince someone somewhere that the returns from the investment, are gonna be better than the interest rate of today, maybe that won't be a hard sell in the current economy either.

What kind of interest rate exactly?

Re: Ask HN: How to Start VC Fund?

#6

Post by changdevhead » Sun, Feb 05, 2023, 5:43 PM UTC

Biba89 wrote: post #4

croatiancoder wrote: post #3

with this amount you'd probably be a follow-on investor even at the earliest of stages. 10 months isn't enough to see if an idea really has wheels

I wouldn’t agree here, because my experiences showed me that in 1-2 months you can know if you are going in the right direction. Of course you can pivot later, but if I do customer research and interviews properly and execute fast with MVP that I can charge for, I can move forward or throw idea and focus on the next one.

They pretty much preach in YC that it'll take 2 years to really know if there's something there. Of course it can happen sooner. But the advice is not to quit before 2 years. Coinbase founder, Airbnb founders, Rippling founder all preach this

Re: Ask HN: How to Start VC Fund?

#7

Post by siegel » Tue, Feb 07, 2023, 4:19 AM UTC

To some extent, it isn't that different from how you raised funds for your prior startups (assuming you did). And, in fact, you might very well want to start with the investors you worked with in the past. You don't need a VC fund to raise $1M. Several angels can get you that money.

But you need a good business plan and to explain how you are going to do better than investors could do investing on their own (or through another fund).