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I’m still going through some of the comments I received on last week’s articles about the heightened competition among VCs for the best (typically SaaS) venture deals. Some more notes on whether large funds investing in small rounds causes VC signaling risk in a moment, but first, a fun anecdote about how lame LPs (still) are.
I was catching up with an ambitious founder of a VC firm this weekend, and we were taking about fundraising for VC firms and particularly the process of connecting with limited partners. Like startup founders, investment firms typically submit fund proposal decks and data rooms to potential LPs, who are then supposed to evaluate said material and either move toward an investment, ask for more information, or run the **** away.
VCs - LPs - Fact - Access - Information
Unlike VCs, however, LPs have apparently not caught on to the fact that access to this information is much more trackable than it was in the past. VCs now realize that their perusal of a deck on DocSend is being monitored by founders, and I have heard from more than one VC over the years that they have their executive assistants click through a deck in a deliberately slow fashion to make it look like they are putting more thought and attention into reading a founder’s fundraise deck than they really are.
LPs though have no such inkling that this is going on apparently. From the VC firm founder this weekend (paraphrasing), “What’s amazing is that I get asked for my data room, and then the potential LP will setup a time two weeks in the future to meet again. Fifteen minutes before our meeting, I get an email notification that they finally opened up the data room and started accessing its files.”
Part - LP
The best part is where the potential LP then waxes on about how much...
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