By Ryan Hoover on Dec 21, 2021
Friends often ask me:
"Should I start a fund?"
First, some context...
I started Weekend Fund in early 2017, shortly after Product Hunt was acquired.The timing was perfect. AngelList was introducing their Venture Funds platform and I finally had enough money to make a GP commit.
At first I was uncertain if I could raise a $1M fund. I think most people have imposter syndrome when doing anything new.
A $1M fund is tiny, especially in our recent capital-abundant market. In 2017 few people started small funds and I was unsure if LPs would be comfortable with a “nights and weekends” investor while I remained the CEO of Product Hunt. Ultimately, I raised $3M for Weekend Fund 1.
Today, it seems like everyone’s starting a fund. We've seen a ton of capital flow into the market over the last few years. But before deciding to raise a fund, it's important to evaluate all options:
Each has its own pros/cons.
Joining a fund
Starting a fund
Starting a fund was the right choice for me. It provides the right balance of autonomy and leverage from LPs’ capital, network, and support. AngelList also relieves a lot of the burden in running a fund with its back office services.
But we also run SPVs. Weekend Fund operates a classic barbell strategy. We invest in early-stage startups through the fund and later-stage opportunities through SPVs, inviting our LPs to participate. We've led SPVs as large as $5.5M.
The key is to figure out what to optimize for within your own financial and time constraints.
Want maximum flexibility and have capital to invest? Consider angel investing.
Is learning how to invest the #1 goal? Maybe join a top fund.
Do you want to prioritize autonomy and create leverage? Start a fund.
This may not answer the initial question, “should I raise a fund?” but hopefully provides more color on the options and tradeoffs for each.
There’s also more investor flexibility than ever before (e.g. 2% min GP commits aren’t really mandatory for most). Get creative.
If you’re curious how we setup our latest fund, read this. If you're planning to raise a fund, drop me a note at firstname.lastname@example.org if I might be able to help. :)