I get the question, “What is it like to launch a fund?” on a regular basis. Most people think it is pure fun and all profit, but nothing can be further from the truth. It has taken me more than a decade of angel, hedge and venture investing to feel comfortable launching my own new fund. The reality is that it is much more difficult to raise money for a fund than to raise money for a startup. The best way I can describe it is like launching multiple startups at once.
I wish I had the ability to completely fund our first fund myself, but I don’t and it probably wouldn’t be a good idea anyway. That means we have to build an investment thesis and get others to believe it. A well pitched startup will have a very clear problem statement and has generated empathy for that problem in their audience. In short, they are solving a problem you understand. This is much more difficult in a fund. You’re thesis in general is: We are going to make investments in promising companies. That just doesn’t generate empathy or excitement in the customer (a fund investor).
Luckily, we have a few unique features at Wavelength. Our focus market, Colorado Springs, is growing economically and in population. There are many active startups (100+), yet few local funding sources for the angel phase. We also do not have a strong local angel network. These elements have combined to form our investment thesis – We are providing a professionally managed fund to give angels connectivity, diversity and access to a rapidly growing market.
The goal of our first fund is not only to make great investments, but to help catalyze the local angel community. Through a great fund experience and a little education, we expect future funds will be a little easier to launch. In the meantime, I get to practice my pitch, for the city, for our startups, for our future, to a few hundred potential investors.