Questions to ask emerging managers

And fun May events

Author

Michael Morgenstern
May 14, 2024

Happy Tuesday Brex community,

In Q2 '24, many Fund I and Fund II venture capitalists face a rough road securing commitments. A tightening macro financial environment and reduced liquidity from limited partners (LPs) are making the journey tougher. For startup founders, understanding the fundraising cycles of those emerging managers is crucial. Here are some pointed questions to help you gauge the strength and strategy of your potential VC partners:

  • "How does your current fundraising progress influence your operational capacity and investments?"
    This reveals how well a VC can support you, despite their financial ups and downs.

  • "Could you provide an example of how you’ve navigated financial constraints to support a portfolio company’s growth?"
    Real-world examples show their capability to deliver value added results during tough times.

  • "What’s your game plan if the fundraising doesn’t meet your targets?"
    Understand if the VC has a solid backup plan or is merely hoping for the best. Did they promise pro-rata? Do they have a reserve strategy?

  • "If you struggle to raise a new fund, am I comfortable being potentially your last investment?"
    Consider the long-term viability of your chosen VCs and their ability to support your growth.

By asking pointed questions, you can better assess potential VC partners. Due diligence is a two-way street; as VCs evaluate your startup, you should vet them too. Let’s root for the Fund I and Fund II’s VCs for the ecosystem's overall benefit. The best emerging managers will work hardest for your company and their investments.

Growing together, Michael Morgenstern

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Startup of the Week 🤩 

David Walsh is the Co-Founder and CEO of LimeLight

LimelightHQ positions itself as the pioneering B2B creator advertising platform that revolutionizes how tech brands achieve virality. They offer a streamlined solution for discovering and engaging with top B2B content creators, automating 90% of the partnership process to maximize efficiency. With the largest database of B2B creators and sophisticated real-time analytics, LimelightHQ enables brands to access highly-engaged audiences at scale, ensuring optimal ROI from influencer partnerships.

Ambassadors Perspective: Content partnerships are emerging as a vital growth lever and a serious strategic category, with brands of all sizes eagerly seeking virality. David is a 3x founder with 2 exits and is well situated to scale in this attractive market.

Venture Capitalist Spotlight 🤩 

Pascal Unger is a co-founder / managing partner at focal vc

Pascal leads pre-seed rounds with a concentrated investment strategy, joining founders from the start with up to $750K. Being true stage specialists, the team at focal built their firm to help their founders cut through Seed and get to Series A and beyond with velocity.

Backing technical software founders, focal knows your early GTM will make or break your startup. That's why they spend a lot of their time on it and also help 150+ of the best revenue executives at today's leading Seed through Series D startups learn from and with each other with The GTM Circle - founders backed by focal get to learn alongside them.

PS: focal recently open sourced their internal VC database on findfunding.vc - check it out if you're looking for the right early stage investors and follow Pascal on LinkedIn for weekly funder profiles.

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