The Track Record Hurdle: How First-Time Fund Managers Can Overcome It

Starting your own investment fund is great, but getting people to invest in you when you're just starting can be tough. Investors want to back people who have a proven track record of success, so it takes more work to convince them to take a chance on someone new. But there are ways to get past that hurdle and win investors over.

We’ve put together a list of  7 things you can do to get over the track record hurdle.

Lead with your unique background and experiences. 

One advantage of being fresh to this is you'll have a different perspective. You may have done some things that set you apart from other managers. Make sure to point out how your way of seeing things could add value to the fund and help you notice opportunities others might miss.

For example, if you've started your own businesses before, double down on how this is truly value add to the founders you back and why they will take your investment over other VCs. Or, if you have expertise in a certain industry, talk about how that knowledge assists with finding promising investments and managing risk well.

Show your team's strengths

The people you have been working with are a big deal for investors. They want experienced managers with strong teams around them. Highlight the diverse skills your crew has like investment experience, knowing how to run companies, and industry knowledge. Emphasize the different skills of the team and how you’re complementary to each other.

Develop a solid investment strategy 

This is key for getting investors interested. Come up with a compelling plan that outlines your focus areas, target types of businesses, and criteria. Explain how your approach is unique and how it can generate strong returns. Ask yourself, does the world really need another B2B SaaS seed fund (shots fired). Why are you different and why would an LP need this in their portfolio? Not enough GPs have strong enough answers to this question. Work on it!

Build connections 

Relationships building is one thing AI cannot do for you fortunately or unfortunately but its super important. Network at industry events, get to know other managers and investors, and show your commitment to the VC world. Take time to understand potential investors' preferences so you can tailor your pitch and also decide if its worth your time. You have to be super focus on 

GP Commitment 

Controvercial but a great signal that you're serious about the success of your fund is investing your own money. This demonstrates you have "skin in the game" and a strong incentive to excel. Additionally, if you’ve been able do any angel investments with your own money it demonstrates you believe in your picking ability.

Go the Extra Mile

Lastly, if you really want to stand out as a new fund manager, you gotta go the extra mile with your LPs. Be super transparent about your investment strategy, which companies you're investing in, and how well your previous investments are currently performing. Treat your LPs like partners - listen to their feedback and let it help guide your strategy. Sharing deaflow shows intent and gives them an opportunity to work with you before they commit to your fund.  Be willing to think outside the box too and take smart risks to find creative solutions to complex problems. 

Be Relatable 

Share your story with LPs so they really get to know the real you and your values. Focus on building long-lasting relationships with LPs - aim for collaboration long-term rather than just short-term gains. By blending conventional wisdom with some unconventional moves, you can really separate yourself from the pack.