The VCs’ guide to keeping LPs happy

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Sometimes, it’s not just what you know, but who you know. Forming the right networks can get you a foot in the door in many instances, and these people can also give valuable advice.

For people who work in VC firms, the important “who”s that they should know are investors and limited partners (LPs) – in other words, where the moolah flows from.

However, VC fund managers often have to deal with a large number of them. The author of today’s story cites a dataset from Carta that shows almost a third of funds managing US$1 million to US$10 million in assets have between 25 and 49 LPs.

Think about all the different expectations and relationships that VCs have to handle day in and day out. Sounds tiring? Today’s story goes deeper into how this plays out and, more importantly, how to manage these investor relationships successfully.

Today we look at:

• Balancing the VC-investor relationship
• Samsung getting ordered to pay US$601 million in back taxes
• Other newsy highlights such as BMW’s partnership with Alibaba and a US$120 million round for a Chinese AI startup

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Keeping all mouths fed

Image credit: Timmy Loen

Relationship management is tough – I know I could never do it well. I’d get too frustrated and I’m not organized enough to handle such a workload. But if you’re a VC that’s already brought investors on board, Kevin Brockland, founder and managing partner of Indelible Ventures, has some advice.

• Numbers game: Raising funds is a major challenge, as VCs have to find people with enough liquid capital to invest, on top of strict marketing laws. As such, keeping the investors they’ve already onboarded is paramount.
• Talk the talk: Setting up a communications strategy with LPs is key. VCs have to look at the cadence of communication as well as how and what to talk about.
• It’s (not) all about the money: Financial returns for LPs is the bare minimum. Many of them seek additional value from VCs, such as strategic insights and connections.

Read more: The VC playbook for managing investor relations

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