Fund Model Canvas
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In the last 12 months, with my newsletter series, I wrote quite a lot about how to start an impact VC fund (now calling conscious VC fund, yep dropping the term “impact”), what are the alternative models existing, and new ways to look at investment thesis.
While writing the first followers newsletters, plus my journey with IWEF as a consultant, made me templatize the whole fund building process into the following nine building blocks that I call fund model canvas:
To build any fund, the following pieces are required to be put in place:
Investment Thesis, covering sections around entrepreneur profile, market gap/needs, potential, vertical (segmentation by value chain), potential and working operating/ business model, existing and possible solutions (pipeline of ventures, technologies, types of investors, and geographies to focus on.
To learn more, click here.Fund Structure, depending on the existing landscape and thesis:
What should be the entity type? - Impact Fund (Finance First vs. Impact First), Accelerator/ Incubator, or Venture Studio
What kind of investment instrument (debt, equity, hybrid or innovative finance), ticket size, stage of ventures?
How's it different from existing competitors? What's the competitive advantage?
If it's a fund, is it a holding company, offshore investment vehicle, open/close-ended fund?
Fund Economics covers pieces around projections (DPI, TVPI, IRR), liquidation events/ exits, financial models using assumptions/descriptions from fund type, and investment thesis.
To learn more, click here.Portfolio Construction defines portfolio strategy, stage of the venture, reserve allocation, risks, fund structure, liquidation strategy, co-investment, recycling, and portfolio management.
To learn more, click here.Fund Process, i.e., the day-to-day functioning of the fund (admin and legal requirements) and venture selection, sourcing, portfolio support process, and fundraising/sales process.
Unfair Advantage / Value Proposition, i.e., how the fund/ fund manager stands out among the existing funds and asset managers.
Profile: Entrepreneurs + LPs, i.e., the persona of entrepreneurs that fund partners would like to invest in and LP persona to raise money from.
Fund Story + Purpose, the story, and the fund's vision
Team, i.e., Who are the fund partners? How is the experience of each partner relevant to the fund?
I plan to work with First-time fund managers (FTFMs), international NGOs, foundations, corporations, CSRs, and philanthropists to provide unique market acceleration opportunities to launch their impact funds and impact venture studios impact bonds, and any other form of blended investment vehicle.
If you are looking for one of them, please visit http://bit.ly/impactfunddesign to know more and write to me at sagar@firstfollowers.co. I would love to learn more from you and would be happy to help in any way.
"first followers" is founded by Sagar Tandon, a founding member at Moonshot Ventures. You can reach him at sagar@firstfollowers.co.
The "first followers" is a monthly newsletter covering impact investing, venture capital, innovative financing instruments, and venture building.