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WT Rolling F?
"Rolling Funds 101"
If you feel like Turner - this one's for you
https://twitter.com/TurnerNovak/status/1296603955674447872?s=20
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"Rolling Funds 101"
If you feel like Turner - this one's for you
https://twitter.com/TurnerNovak/status/1296603955674447872?s=20
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[INTRO]
Rolling Funds are a new way for Fund Managers (GPs) to raise money from Limited Partners (LPs)
They are gaining attention because they significantly reduce barriers to entry for new fund managers
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Rolling Funds are a new way for Fund Managers (GPs) to raise money from Limited Partners (LPs)
They are gaining attention because they significantly reduce barriers to entry for new fund managers
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In Feb, AngelList(AL) introduced and launched a platform to support Rolling Funds
In Aug, @shl debuted his Rolling Fund (RF) on twitter
https://twitter.com/shl/status/1291041066716557312
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In Aug, @shl debuted his Rolling Fund (RF) on twitter
https://twitter.com/shl/status/1291041066716557312
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[KEY DIFFERENCES]
There are 2 core features to RFs -
A. The ability to market your fundraise
B. The ability to raise $s on an ongoing basis
Each is independent of the other, but are stronger together
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There are 2 core features to RFs -
A. The ability to market your fundraise
B. The ability to raise $s on an ongoing basis
Each is independent of the other, but are stronger together
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A. The ability to market your fund raise
Regulations prevent traditional VCs from publicly marketing their fund raise (under rule 506b)
This means that most of the LP solicitation and conversations need to happen in private/ need warm intros
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Regulations prevent traditional VCs from publicly marketing their fund raise (under rule 506b)
This means that most of the LP solicitation and conversations need to happen in private/ need warm intros
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RFs use the same regulation that allow crowdfunding of startups (506c)
This means that fund managers can solicit and market publicly
Powerful example -
https://twitter.com/jjacobs22/status/1296865388135931911?s=20
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This means that fund managers can solicit and market publicly
Powerful example -
https://twitter.com/jjacobs22/status/1296865388135931911?s=20
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B. the ability to raise $s on a continuing basis.
Traditional funds
- Take new capital every 2-4 yrs
- Raise is time intensive, up to 1.5 yrs
- All commits need securing before fund can make investments
- LP commits are 1 time event
- New LPs need to wait for next fund
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Traditional funds
- Take new capital every 2-4 yrs
- Raise is time intensive, up to 1.5 yrs
- All commits need securing before fund can make investments
- LP commits are 1 time event
- New LPs need to wait for next fund
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RFs
- Take new capital every qtr
- No dedicated time required for raise
- Can get to work (investing) with minimal commitments, as their next opportunity to raise is 3 months away, not 4 yrs
- LPs commit on recurring qtrly basis
- New LPs can join next qtr
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- Take new capital every qtr
- No dedicated time required for raise
- Can get to work (investing) with minimal commitments, as their next opportunity to raise is 3 months away, not 4 yrs
- LPs commit on recurring qtrly basis
- New LPs can join next qtr
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[COMPLEXITIES]
RFs have different LPs with different start & end dates, un-invested money rolling over, new LP capital always coming in.
This makes tracking fund economics (aka who is owed what) hard.
AL's platform solves for this, allowing GPs to focus on investing
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RFs have different LPs with different start & end dates, un-invested money rolling over, new LP capital always coming in.
This makes tracking fund economics (aka who is owed what) hard.
AL's platform solves for this, allowing GPs to focus on investing
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[BENEFITS]
A. New fund mgrs. get started with minimal commitments and grow as they build track record
B. Turn fundraising more of a subscription model than a big-bang fund raise
C. Allow funds to market key moments and see increased LP commitment following qtr
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A. New fund mgrs. get started with minimal commitments and grow as they build track record
B. Turn fundraising more of a subscription model than a big-bang fund raise
C. Allow funds to market key moments and see increased LP commitment following qtr
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[ENDING THOUGHTS]
A. While they will be the most attractive to emerging fund managers in the short term, with time - it can be and will probably be used by experienced managers as well
https://twitter.com/lpolovets/status/1291959253696016384?s=20
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A. While they will be the most attractive to emerging fund managers in the short term, with time - it can be and will probably be used by experienced managers as well
https://twitter.com/lpolovets/status/1291959253696016384?s=20
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B. The concept of rolling funds, while pioneered by AL can be implemented by fund managers themselves
e.g. if fund managers have specific nuances like rev share model with founders etc
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e.g. if fund managers have specific nuances like rev share model with founders etc
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Lastly, I think RFs will be incredible for overlooked founders and help us get to 10x founders
https://twitter.com/gauravmaken/status/1295865828173209600?s=20
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https://twitter.com/gauravmaken/status/1295865828173209600?s=20
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