Can anyone here at a smaller LMM fund ($50MM - $200MM) speak to:
-What types of LPs have been the most helpful.
-How these LPs have delivered value beyond a check.
-How you vet them/their value add.
-Red flags to quickly filter out potentially problematic LPs.
Asking because LMM gives you much wider LP options (can take small checks) VS big funds who can basically only raise from institutions due to size/numbers.
So far our approach has just been building a network, getting to know people, and then lining them up but this feels kind of slow and antiquated.
My other issue is that I have a feeling some of these people are pulling the VC, "value add" BS. Short of rinsing them through a top-grading style interview which would be ridiculous...how would you recommend vetting the value add side?
Tough since you really are stuck/married to LPs for an extended amount of time.
Our goal with this first fund is to build a strong LP base we can scale off. Just like when we've raised for our companies, I would rather take lower fees and work with people who can add a lot of value to what we are doing/guide us/teach us VS dumb money.
Following.
I think there a couple of LP groups that come to mind.
a) Family offices or HNW who are plugged into a specific industry that your fund specializes who may be able to help provide intros for sourcing, references for management team hires etc.
b) Institutional LPs that can help guide fund formation and growth, including being able to write bigger cheques as the fund grows.
How would you vet them faster than the slow method I described above?
Speaking with other GPs who have a similar strategy (and are willing to share).
For institutional LPs, that is pretty binary as they either do or don’t take first time fund risk. Doing a bit of searching (press articles or paid for sites) might help speed up this part of the short list.
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