Starting a Venture Capital Fund

Don't think you have to invest in crazy companies if you want to start a venture capital fund. You can start with very small local businesses and work your way up!
Don’t think you have to invest in crazy companies if you want to start a venture capital fund. You can start with very small local businesses and work your way up!

I get a lot of people who are interested in acquiring Real Estate or starting Equity Hedge Funds.

Although we talk about those two a lot on my channel and in this blog, there are tons of different ways you could invest and start a fund.

I have gotten questions recently and thought it would be good to describe another type of fund.

VENTURE CAPITAL FUNDS.

Let’s talk about what it is,

what relationships you need,

and how it works.

Digging In

Sometimes people might get this confused with, or refer to it as, ANGEL INVESTING.

Really the difference between the two is that Venture Capital is using other people’s money and Angel Investing is using your own money.

Venture Capital is when you take your fund and invest into early stage companies…

Also known as Seed Companies.

Typically when you find a venture team their founder(s) will be one of two people:

  1. An Expert Investor
    • This is someone who has worked in the industry for a long time and have invested in businesses before.
  2. A SUCCESSFUL Entrepreneur
    • This is most likely someone who has built their business, sold is for a lot of cash, and now they want to invest in other small businesses.

And then there’s you…

Or perhaps you are one of these people?

Either way that’s okay and you can still reap the rewards of a Venture Capital Fund.

If you are not one of these people you have a couple options….

Either become one or partner with someone who is one.

Now I’ve talked about partnering and networking in other posts so let’s focus on becoming.

Just Start Already

While becoming an entrepreneur, growing a business, and then selling that business for huge profit sounds amazing…..

It isn’t everyone’s forte.

So let’s think the other way,

Becoming an expert investor.

First step is to acquire a Harvard MBA.

Next is… Just kidding.

If there is anything I have taught or that my course teaches it is that you do not need to have all of the fancy stuff to get started.

Harlem Capital, for example, started with $25K.

They each put in $5K of their own money, because that’s all they had, and they started investing in very early, small businesses.

By starting right now you will be ahead of 95% of the type of people in this space. Just get that first deal! Just find a company to invest in!

By starting right now you will be ahead of 95% of the type of people in this space. Just get that first deal!

My first fund was $49k.

But guess what…

That is more than almost anyone else has done.

Simply because I started!

The Key is What You Know

I had someone on my channel who starting right out of college.

They went to older people in their 50s or so and said,

“You may not know the difference between Zoom, and FaceTime, and Google Meet but I do!”

He convinced them that he could invest in small, hip, companies because he knew them and he knew what his generation would use and like.

Figure out what you are good at, or know a lot about, and then look for small companies to invest into who are in that niche!

So start thinking about that.

Relationships and team dynamics are crucial to your fund so stick with what you know and leverage other people’s skills to grow.

Relationship to the Company

Unlike Private Equity where you are very hands on and moving a lot of pieces, Venture Capital is pretty passive.

You are most likely just purchasing equity in a business and providing expertise to them.

If the company you are investing in is a good company, then you will probably not be the only VC Firm interested in investing into them.

This is why you want to show these companies that you are a good partner to work with.

Build rapport and your resume!

Again… GET STARTED!

Conclusion

Obviously there is a lot more that goes into this but really with any venture you just have to get started and do it.

We want to be able to build confidence in ourselves and others’ confidence in us as well.

You are not going to be able to learn everything before you start and you will learn along the way.

Trust me…

I am learning all of the time.

If you do want to know more then follow me on social media or check out our youtube channel and course.

Be confident and go get it!

Take care guys.

Bridger Pennington

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DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.


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