We started to plan for our
fundraising for Greycroft II, our second fund, around Christmas 2008. This was
a few months after Lehman Brothers collapsed.
Our team of four partners agreed
among ourselves that we wanted to raise a fund of $125 million. Because
we were not yet 60% invested in Greycroft I, we knew we had plenty of lead time
to complete our fund raising and commence investing in the 4th quarter of 2009
or at the latest, 1st quarter 2010.
The general partner allocation in
the new fund was set in advance, so as to avoid greed or dissension which often
times sets in when you get close to the goal. The management company and its
structure were also set. Since everyone had been working for below norm
compensation in the first fund (a $75 million fund raised entirely from high
net worth investors, operating in 2 cities with 4 partners, a senior associate
and 2 administrative assistants), the second fund would be an opportunity to be
more competitive, especially as we planned to bring new people on board.
We were a team and everyone was bought in to our long range plans including our
assistants.
By late February 2009 we had put together our track record up to that point in Fund I and prepared a 20-page Powerpoint deck. We had to update the presentation 3 times during the process as we saw what was working and what wasn’t and to adjust for time passed. Most important of all, we had and have a clear strategy of what we invest in, how we invest, and our overall disciplined approach to the venture capital business. We communicated our determination to be a small fund and stay a small fund and make small investments in certain types of companies with low pre-money valuations.
By late February 2009 we had put together our track record up to that point in Fund I and prepared a 20-page Powerpoint deck. We had to update the presentation 3 times during the process as we saw what was working and what wasn’t and to adjust for time passed. Most important of all, we had and have a clear strategy of what we invest in, how we invest, and our overall disciplined approach to the venture capital business. We communicated our determination to be a small fund and stay a small fund and make small investments in certain types of companies with low pre-money valuations.
