I’ll share my learnings.
When you go to raise a “Roman IV+” fund (your 4th, 5th, 6th) fund, the LPs will indeed be expecting an extraordinary amount of data. And in fact, all you may be is data. Literally, they will often flip to the end of the deck, just talk about numbers, and then with the time left, go back to the front and talk about you and you investment thesis.
But when you go to raise your own first fund, it really is more than that. The results do matter, but the rest of the package matters more than in an established fund. There are lots of managers with early impressive, unrealized gains out there. Lots of them. And there are lots of interesting managers that don’t have those gains yet.
I put together data on my track record, which was decent but early. But some learnings:
- The LPs did far, far more founder + ecosystem diligence in a new fund. They really were looking for a differentiated product. I think for a Fund V, LPs still want a differentiated product, but they spend more time just with the numbers alone.
- The LPs didn’t care about angel investments at all, even with a high multiple. Not a single one wanted to dig in here, other than the ones that served as references.
- The LPs were very good at comparing early results to other First Time (“Roman I”) funds. That context seemed even more important than returns.
- Your co-investors are very important for LPs evaluating first-time managers. Fair or not, you get a lot of points for Sequoia, Accel, Bessemer, Social Capital, Emergence, etc. co-investing. When they see top firms having followed into multiple of your investments, that seemed to be very impactful. Especially if they are positive reference checks.
- Successful, proven GPs that really vouch for you. This is rarer than you think. When a successful GP says “invest in Elena” to one of her LPs … the LPs listen. And quickly take the meeting. But every new fund is competition for your LPs’ capital. So truly strong recommendation are much rarer than you’d think.