Jan 11, 2023 · 28m · 20vc
20VC: The Memo: How to Raise a Venture Capital Fund (Part I) | The Core Lessons from Raising $400M Over The Last Four Years| The Biggest Mistakes VCs Make When Fundraising | How To Find and Build Relationships with New LPs
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Harry Stebbings presents the inaugural installment of 'The Memo' on 20VC, breaking down key strategies, common mistakes, and operational tactics for raising an early-stage venture capital fund based on his experience raising $400 million.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 99.7% of the talking time here. How this is scored →
Harry as informed peer 0.0 Guest teaching 0.0 Guest disagreement 0.0 Harry pushing back 0.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 4:20 Critiquing inflated target fund sizes
In a solo monologue format, Harry forcefully criticizes fund managers who set overly ambitious fundraising targets that ruin momentum.
Hardest push from Harry ▶ 17:20 Rejecting minimum check size requirementsHarry strongly pushes back against standard industry arrogance around check sizes, urging managers not to set restrictive check minimums.
Biggest teaching moment ▶ 5:30 Educating on fee math and investable capitalHarry breaks down how management fees compound over ten years, educating listeners on exact portfolio construction calculations.
Harry holds his own ▶ 14:25 Demonstrating expertise via 20VC LP structureHarry leverages his direct personal experience managing $140M across institutional and founder LPs to demonstrate mastery in fund construction.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Defining Strategy: Fund Size, Portfolio Construction, and MVFS | 0 | 0 | 0 | 0 | This segment is a solo monologue by Harry Stebbings breaking down minimum viable fund size and portfolio construction math. Because there is no guest interaction, all dynamic scores are required to be zero. | |
| Team Composition, Track Record, and Mitigating Risk | 0 | 0 | 0 | 0 | Harry delivers a solo presentation detailing team composition, track record requirements, and tactics for mitigating LP team risk. The absence of guest dialogue requires all dynamic scores to be zero. | |
| Structuring the LP Base and 20VC Case Study | 0 | 0 | 0 | 0 | Harry outlines LP base diversification strategies and shares 20VC's real internal LP composition as a case study. As a monologue without guest interaction, host and guest engagement scores remain zero. | |
| Creating Momentum: Friendlies, Social Proof, and Minimum Checks | 0 | 0 | 0 | 0 | Harry discusses building fundraising momentum by securing friendly LPs and avoiding minimum check size restrictions. Dynamic interaction metrics remain zero in this solo presentation. | |
| LP Discovery Channels and Outreach Tactics | 0 | 0 | 0 | 0 | Harry presents actionable LP discovery channels including PitchBook, LinkedIn, and Clearbit. Due to the solo monologue structure, host and guest interaction scores are set to zero. | |
| Long-Term Relationship Building: LPs Invest in Lines, Not Dots | 0 | 0 | 0 | 0 | Harry emphasizes long-term relationship building with LPs and maintaining regular quarterly communication. All dynamic scores default to zero for monologue segments. |
Statements from this episode (16)
Harry Stebbings Raised $400M Across 20VC Funds in Four Years
“This is the first episode in what will be a series in the biggest lessons I've learned from raising close to four hundred million dollars over the last four years”
Stebbings: Overambitious Target Fund Sizes Are Fund Managers' Biggest Mistake
“Now, the single biggest mistake I see fund managers make is they go out to fundraise with too high a target fundraise.”
Stebbings: Seed Funds Need at Least 30 Portfolio Companies for Diversification
“You are not a good enough picker at seed to only have 15 investments. You need a large enough level of diversification, and 30 is generally considered large enough when you run the maths.”
Stebbings: Late-stage angel checks fail to prove seed investment capability
“This does not prove you are a good seed investor, but it merely shows you have access to series B and series C investments. These are very different things, and actually can only serve to discredit you often, as it shows a little bit of naivety.”
Stebbings: LPs now prioritize DPI returned cash over paper markups
“With regards to track record, in the past, TVPI or paper markups, they were enough. Now, there is a much greater focus on DPI, which is returned capital to investors.”
Stebbings: VC teams lacking shared working history trigger LP team risk
“If you have not worked together as a team, the LPs that you are raising from will inherently view this as a massive red flag and label it team risk.”
Stebbings: Institutional LPs rarely exceed 20% of a venture fund
“An LP will never want to be more than 20% of the LP dollars in a fund, and so the size at which an institutional LP would be interested is when you raise twenty-five million dollars plus at the very minimum, and then they can invest at least Five million dolla…”
Stebbings: Raising $100M can be easier than raising $30M
“It's sometimes easier to raise a hundred million dollar fund than it is a thirty million dollar fund. Why? Because you unlock new tiers of LPs when you increase the size of your fund. More institutions are able to invest in a hundred million dollar fund than t…”
Stebbings Predicts 50% Of 2021-2022 Micro Funds Will Fail To Raise Again
“As I said, prediction, I think 50% of the micro funds raised in the last two years will not raise subsequent funds.”
Stebbings: Pitching cold institutional LPs early kills fundraise momentum
“The biggest mistake I see early fund managers make is they go out to large institutional investors that they do not have an existing relationship with, and they spend three to four months trying to raise from them. They lose heat and They lose morale and enthu…”
Stebbings: Smallest LP check writers are often the most helpful
“Consistently, the most helpful LPs for me have often been the smallest LP checks.”
Stebbings: Ubiquitous big-name LPs offer little signaling value
“I think a big mistake I see a lot of people make is they get a big name investor in their fund, but that big name is also invested in 200 or 300 other funds, in which case, It doesn't carry much weight that they invest in your fund”
Stebbings: 90% of committed LPs will provide three investor referrals
“Given they've already invested in your fund, they already believe, and so, 90% of them will come back with three names and make those intros.”
Stebbings: VCs refusing to introduce other managers to LPs is moronic
“Many VCs do not like to introduce other managers to their LPs. They view it as competition. This is moronic.”
Stebbings: Institutional LPs invest in lines, not dots
“LPs invest in lines, not dots. Especially for institutional LPs, it is so rare that an institution will meet you and invest in you without an existing relationship, and without having followed your work before.”
Stebbings: I meet two new LPs weekly and email quarterly updates
“In terms of how I think about relationship building with LPs, I always meet two new LPs every week. Two new LPs every week. I then ensure with every quarter, I have a check-in with them, and ensure that they each have a quarterly update. I email them personall…”