Navigating the landscape: Closing your fund as a emerging fund manager
Ada Ventures is looking to have a positive impact on the whole industry. By 2030, as part of our impact goals, we aim to catalyse VC to make it more inclusive and help diversify the check writers in UK VC.
One of our initiatives is a series of dinners to nurture conversations and relationships between diverse emerging fund managers and established LPs in our network. Some of these LPs have invested in Ada Ventures; some of these emerging fund managers are part of the Ada Ventures network.
The path to securing commitments from Limited Partners (LPs) and closing a fund can be fraught with challenges. Here are some insights captured during yesterday's curated dinner between fund managers and LPs, focusing on the keys to raising and closing a fund.
I wanted to personally thank the Coutts team. We’re delighted by our partnership with them and their commitment to support diversity at the fund manager level. It's was a brilliant conversation, filled with insight, reflections and ideas for collaboration as we all strive for versions of Inclusive Alpha.
Tawanda Chitunhu CCBI, Associate Director, Financial Services at Coutts
Michael Tefula, Principal and Head of Product at Ada Ventures
Douglas Sloan, Managing Director at Better Society Capital
Surabhi Narendranath, Investment Principal at Snowball
Chenelle Ansah, General Partner at LightPace VC
Lyubov Guk, Founding Partner at Blue Lake VC
Kenneth Kashif Thomas, Principal at BackFuture
James Noyes, Associate Director, Commercial Banker at Coutts
Understanding LP Expectations
It was emphasised that LPs value transparency and detailed track records. Instead of focusing solely on IRR, presenting a comprehensive view of past investments, milestones, and team dynamics can make a difference. Importantly, LPs appreciate clarity about the manager’s strategy and evidence of how past experiences align with future goals.
Challenges Unique to Emerging Managers
Emerging managers often face unique challenges, such as the absence of significant fund management experience. The LPs pointed out that for first-time managers, showcasing a robust support network and an understanding of fund management aspects, such as compliance and operations, can be vital. Additionally, building relationships with potential LPs early, even if they have to say, “no for now,” keeps lines of communication open for future opportunities.
Opportunities for Support and Growth
Despite the challenges, there are emerging opportunities to support diverse emerging fund managers. Initiatives that provide guidance and potentially operational funding without necessarily taking up an LP position are beginning to take shape. These efforts were acknowledged as crucial in easing access barriers and supporting long-term success.
