Choose your VC wisely based on ticket size

Finding the right VC fund can be a pivotal step.

The amount you need to raise plays a crucial role in determining the appropriate VC partner.

Today, I’ll guide you through how to match your funding needs with the right type of VC firm.

First let’s start by understanding capital allocation per general partner.

For example for raises of $3M to $6M, look for a VC firm where the general partners manage around $50 million each.

Such firms are typically early-stage investors and are well-suited for smaller, initial investments.

These firms might invest $8 million to $12 million across four to six companies over three years.

Expect initial investments to range from $2 million to $8 million, with subsequent rounds seeing similar amounts for follow-on financing.

For larger raises, $20M and above, you’ll need a VC firm with more capital per partner.

Later-stage VC firms with $100 million or more per general partner are better equipped to handle such large investments, usually deploying $10 million to $20 million per company.

What to Avoid?

Too Small VCs: If a firm’s total capital per partner is significantly below your funding needs, your project might be underfunded, or the firm may lack the leverage and resources you require.

Too Large VCs: Conversely, approaching a firm with a capital reserve that vastly exceeds your needs might lead to your business being overlooked. Such firms are likely to consider smaller investments as “training wheels” projects, often delegated to less experienced associates.

In summary your goal should be to find a VC whose fund size and investment strategy align with the stage and specific needs of your startup.

Whether you’re making your first pitches or seeking substantial growth funding, understanding the typical capital allocation per partner at a VC firm can guide you to the right investor.