Interview
Sheel Mohnot: How I Raised My First VC Fund
- Executing a second close in March 2020 following the December 2019 first close to demonstrate active investing and encourage Limited Partner (LP) engagement.
- Reducing the fund target to a range of $30 million to $40 million in anticipation of declining market valuations and planning to raise a smaller fund under these conditions.
- Anticipating that falling interest rates and monetary expansion will restore LP interest following an initial market collapse.
- Expecting fundraising to become easier once the process reaches the halfway mark with institutional commitments and enhanced credibility from invested funds and university endowments.
- Planning to close Fund Two in December 2021, with the expectation that the process will be completed in approximately one month due to favorable market timing.
- Predicting that LPs who previously declined will return to commit as market conditions shift in May, generating demand that exceeds available space in a subsequent fundraising round.
- Utilizing specific deadlines and timelines to manage LP psychology, aiming to set a one-month window for university endowments with a March commitment date to avoid perceived urgency or excessive delay.
- Implementing a concentration strategy limiting all LPs to 10% or less of the fund to ensure stability, rejecting larger 40% commitments accepted in Fund One due to capital needs.
- Forming a five-member LPAC comprising one family office and several fund-of-funds, specifically including Gary Tan.
- Recognizing the risk that some university endowments with established relationships may fail to commit if granted more time than is practically available.