Venture Capital Consulting

New VC fund managers do not know that these things they are doing are completely ILLEGAL… ❌ There are very strict rules around fundraising. Yet many new GPs copy what they see others doing — even when it’s illegal. The risk? Trouble today, or 5–10 years down the line when regulators or LPs look closer. Sophisticated LPs know the legal lines — and crossing them exposes both liability and inexperience. Here are the 3 most common fundraising violations (and how to avoid them): 1️⃣ PERFORMANCE-BASED FUNDRAISING COMPENSATION 👩🏾⚖️ Many “Vendors” often say: - “I’ll be a venture partner — give me carry for LPs I bring.” - “We’ll raise for you — just pay a % of capital committed.” 🚫 Illegal without a broker-dealer license ($50K–$150K+ + ongoing compliance). Even employee bonuses tied to fundraising can trigger violations. ✅ Legal way: Pay fixed fees or salaries unrelated to fundraising. Compensate with cash, equity or carry — but not tied to capital raised. 👉 Reality check: As a new manager, it’s extremely unlikely that anyone else can fundraise for you without a track record. You’ll almost always need to do the hard work yourself. 2️⃣ GENERAL SOLICITATION 👨🏻⚖️ New managers assume LPs will roll in if they “go public.” Tactics include: • LinkedIn posts about fundraising • Cold DMs to people • Podcasts/webinars about your fund • “Contact us to invest” buttons on websites 🚫 All illegal — unless you’ve structured under narrow exemptions. Even cold outreach counts as solicitation. ✅ Legal way: You can only pitch people you have pre-existing relationships with who are accredited investors. Network authentically, vuild relationships, then pitch one-on-one. 👉 Reality check: Public fundraising isn’t just illegal — it looks cheap. LPs won’t trust someone blasting cold posts with no track record. VC is trust-based. Public asks scream inexperience. 3️⃣ RAISING FROM EU LPS WITHOUT COMPLIANCE 🧑🏿⚖️ Many assume: • “If a European LP wants in, I can accept the money.” • “Everyone else does it — must be fine.” 🚫 Wrong. The EU regulates under AIFMD (Alternative Investment Fund Managers Directive) and MiFID II (Markets in Financial Instruments Directive). Even one EU LP can trigger filings. Regulators act quickly. ✅ Legal way: Work with EU securities counsel. File required notifications in each jurisdiction before accepting European LPs. 👉 Reality check: European LPs expect compliance. Skip it, and you lose credibility. Worse — a violation can come back years later and jeopardize your fund. Breaking the rules — even by accident — is the fastest way to undermine your credibility. And “everyone else does it” is not a defense. The managers who win are the ones who know the rules, build real relationships, and raise the right way. ⚖️ Know the rules. Follow them. Your fund' future depends on it.

One of the first mistakes I made when launching my first regulated business was delegating compliance. I started with TransferTo, a mobile micro value transfer service, which wasn’t regulated. Eventually, TransferTo split into two branches (now DT One and Thunes), with the new branch handling actual money transfers that required regulatory compliance. At that time, I thought, "I'll hire a Chief Compliance Officer and let them set up the function," just as I did with marketing or tech. That was a mistake. I faced significant challenges in opening a bank account because I hadn't fully mastered my processes. I also had a hard time communicating with my compliance officer. I didn't have the words or the right codes. Regulatory compliance is ultimately the responsibility of the company and its leadership—it cannot be outsourced. As a CEO, I believe it's essential to make the effort to understand it because the risks for the company are too significant. The least severe risk is a fine. The moderate risk is a suspension of the license. The most severe risk is revocation, or even imprisonment. To effectively manage these risks, I believe it's the CEO's duty to establish the compliance framework. Get your hands dirty. Understand the mechanics. Then, the Chief Compliance Officer can execute your plan. And this is exactly what regulators expect. The CEO's ability to manage compliance is one of the key aspects they evaluate when you apply for a licence. They don't require you to know how to code, but they do expect you to fully understand your company's compliance. If I have one piece of advice for a fintech entrepreneur: invest in compliance. The stakes are too high. As a startup, it could destroy your business. As a scale-up, it could strongly hinder your growth.

Venture capital is full of noise - narratives, anecdotes, and opinions. Over the past few years, I’ve worked to cut through that by doubling down on data: dissecting the structural traits of this asset class, from illiquidity and vintage diversification to the nuances of fund math. As an LP, digging into private and public datasets has given me a sharper view of how allocation decisions are made - and revealed how little of this analysis is shared for other GPs and LPs to learn from. That’s why I’ll be sharing these insights more consistently through "𝐒𝐢𝐠𝐧𝐚𝐥𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐍𝐨𝐢𝐬𝐞" - my data-driven lens on how LPs approach venture allocation, with a focus on uncovering the insights hidden in the data. Whether zooming in on Canadian venture or zooming out to global trends, my aim is to provide frameworks that GPs and LPs can apply to their own decision-making. So where to start? First post below 👇 𝐏𝐨𝐬𝐭 𝟏 – 𝐖𝐡𝐲 𝐝𝐨 𝐬𝐦𝐚𝐥𝐥𝐞𝐫 𝐕𝐂 𝐟𝐮𝐧𝐝𝐬 𝐨𝐟𝐭𝐞𝐧 𝐩𝐫𝐨𝐝𝐮𝐜𝐞 𝐭𝐡𝐞 𝐬𝐭𝐫𝐨𝐧𝐠𝐞𝐬𝐭 𝐆𝐏–𝐋𝐏 𝐚𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭? 𝐓𝐡𝐞 𝐚𝐧𝐬𝐰𝐞𝐫 𝐢𝐬𝐧’𝐭 𝐣𝐮𝐬𝐭 𝐨𝐮𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 - 𝐢𝐭’𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐞𝐜𝐨𝐧𝐨𝐦𝐢𝐜𝐬. In venture, we’ve all heard that “small funds outperform.” That deserves its own deep dive (coming later 👀), but the real strength of smaller funds often gets overlooked: 𝐭𝐡𝐞 𝐚𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐨𝐟 𝐢𝐧𝐜𝐞𝐧𝐭𝐢𝐯𝐞𝐬 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐆𝐏𝐬 𝐚𝐧𝐝 𝐋𝐏𝐬. With smaller funds, there’s only one path to wealth creation - carried interest. And that’s where alignment is sharpest. My analysis makes this clear. Looking across six real funds with different sizes and partner counts, I calculated the Net TVPI needed for each partner to generate $50M: • Fund A ($1.2B, 8 partners) → 𝟏.𝟓𝐱 Net TVPI • Fund F ($15M, 1 partner) → 𝟏𝟑.𝟓𝐱 Net TVPI - 𝟗𝐱 𝐡𝐢𝐠𝐡𝐞𝐫! This shows why smaller-fund GPs must chase outlier outcomes and bring a level of grit and hustle often absent at larger platforms. Even more telling is comp mix. For Fund A, 60% of the $50M comes from fees - guaranteed regardless of performance. For Fund F, 95% is entirely variable, fully tied to carry. And that’s the key. 𝐋𝐏𝐬 𝐨𝐧𝐥𝐲 𝐠𝐞𝐧𝐞𝐫𝐚𝐭𝐞 𝐰𝐞𝐚𝐥𝐭𝐡 𝐭𝐡𝐫𝐨𝐮𝐠𝐡 𝐜𝐚𝐫𝐫𝐢𝐞𝐝 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 - and in smaller funds, that’s exactly where GPs focus. 𝐒𝐨, 𝐰𝐡𝐚𝐭 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬? 𝟏. 𝐑𝐮𝐧 𝐭𝐡𝐞 𝐍𝐮𝐦𝐛𝐞𝐫𝐬: LPs should model net fund performance needed for each partner to earn $10–50M. Low hurdles from large funds or oversized partnerships weaken incentives. 𝟐. 𝐁𝐢𝐠 𝐅𝐮𝐧𝐝𝐬 = 𝐁𝐢𝐠 𝐅𝐞𝐞𝐬, 𝐒𝐦𝐚𝐥𝐥 𝐅𝐮𝐧𝐝𝐬 = 𝐓𝐫𝐮𝐞 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭: Large funds rely on fees, insulating partners from performance. In smaller funds, carry dominates — creating sharper GP–LP alignment. 𝟑. 𝐂𝐚𝐫𝐫𝐲 𝐢𝐬 𝐭𝐡𝐞 𝐎𝐧𝐥𝐲 𝐏𝐚𝐭𝐡: In small funds, GPs earn meaningful wealth only through carry — the same source of returns for LPs. This is just the start of Signals in the Noise 🤓

What I Would Do Differently If I Had to Learn Financial Modelling Again (From Zero to Deal-Ready) If I had to go back and teach my younger self how to learn financial modelling — properly — I wouldn’t start with Excel shortcuts or template downloads. I would do this instead: Step 1: Learn to Read, Not Just Build – Download 3–5 real annual reports. – Understand how numbers flow — from revenue to cash to debt. – Ask: What story do these statements tell? Don’t touch Excel until you can explain a business just by reading its financials. Step 2: Start With Simple Forecasts, Not Full Models – Project a company’s revenue for 3 years based on segment trends. – Forecast just one line: Cost of Goods Sold, based on gross margins. – Then gradually add SG&A, interest, taxes. Start narrow, build out. Don’t aim for a 3-statement model on Day 1. Step 3: Learn How Statements Interlink – How does Net Income hit the Balance Sheet? – Where does Depreciation go after the P&L? – What connects Net Working Capital and Cash Flow? These are the glue of all models. Step 4: Rebuild a Real Model, Cell by Cell – Don’t download templates. Recreate one from scratch. – Match outputs to a company’s reported numbers. – Reverse-engineer until you understand the logic behind every formula. Step 5: Build the Muscle With Reps, Not Just Watching Tutorials – Modeling is a skill built by doing—not by watching someone else build. – Build one new model a week: pick a company, forecast basic statements, tie it all up. – Revisit old ones, spot your errors, and iterate. Step 6: Graduate to Scenarios and Sensitivities – Add flexibility: What if revenue drops by 10%? What if debt doubles? – Learn to set up toggles, dropdowns, and dynamic assumptions. That’s when you stop being a student and start thinking like a banker. Final Step: Focus on Communication, Not Just Calculation – A great model is accurate, intuitive, clean, and explains itself. – Use colors, formats, notes. Your future self (or MD) will thank you. Follow Pratik S for investment banking careers and education

How our $3.5M journey began with a single LinkedIn message. I am happy to share my experience in how we broke through the noise to reach out over LinkedIn to VC's... From countless trips between Chennai and Bangalore, to endless meetings and pitches—securing our seed funding was a journey of persistence, networking, and learning. Here's how we did it: We kicked off with cold outreach through LinkedIn, directly targeting VCs we knew from our network. It was gruelling, but we decided to go for it. Our efforts to get a foot in the door finally paid off when we received our first term sheet. Breaking through to VC partners was our next major challenge. We started at the bottom, sharing our story with analysts and gradually working our way up. It required a persistent effort just to be heard. A common barrier we encountered was a lack of industry knowledge among VCs, especially those from B2C backgrounds. We often found ourselves educating them about the economics of our B2B space rather than discussing our business model right away. This required patience, but it was crucial for setting the stage. Navigating the VC landscape taught us to be meticulously prepared to answer any question—no matter how minute. Our readiness to provide detailed explanations about our business helped build credibility and trust. After over 60 meetings with global VCs, each interaction helped us refine our pitch and strengthen our narrative. The journey wasn't just about funding; it was a master class in VC dynamics and relationship-building. To all the new founders out there gearing up for your funding rounds, remember: Persistence, clarity, and a willingness to educate your potential investors are your greatest tools. Be ready to embrace a steep learning curve and view each meeting as an opportunity to enhance your approach. I hope this insight is helpful to anyone embarking on a fundraise. If you have questions or would like to connect, please don’t hesitate to reach out!

Budgeting is dead. Capital allocation is the future. Most finance teams are still budgeting like it’s 2005: Last year’s numbers plus 5%. Every department gets a slice. We debate over line items no one remembers by Q2. But here’s the truth: You don’t grow a business by budgeting. You grow it by allocating capital. The best CFOs don’t think in cost centers—they think in investment portfolios. They don’t ask: “How much should we spend on marketing?” They ask: “If we put another $500K into marketing, what do we expect in return? And is that a better use of capital than product or headcount?” Here’s how to shift your mindset: 1️⃣ Start from ROI, not last year’s spend Every dollar should fight for its life. If it doesn’t generate value, cut it. 2️⃣ Kill “evenly distributed” budgets Not every department deserves more. Cut what doesn’t work. Double down on what does. 3️⃣ Turn your finance team into capital allocators Train them to evaluate investments, not just track expenses. Teach them to ask: What’s the return on this project? What’s the payback? What are the risks? The future of finance isn’t about tracking the budget. It’s about owning the company’s financial strategy. Because in the end, capital allocation IS strategy. 💬 How many times a year do you reforecast? #CFO #FPandA #StrategicFinance #CapitalAllocation #FinanceLeadership #BusinessGrowth #CFOInsights

Entering a market isn’t guesswork. It’s math. And the equation is simpler than you think. When a new player shows up, incumbents move fast: → Drop prices until rivals run out of cash → Lock up distributors and suppliers → Flood the market with brand spend → Sign long contracts with penalties → Lobby regulators to raise barriers That’s 5 of 10 ways big companies protect their turf. For new entrants, fighting head-to-head rarely works. The smarter play is partnership. Instead of burning years and millions, you can borrow scale, credibility, and access. Here are 5 proven ways to do it: Co-distribution ⤷ Partner with a non-competitor who already sells to your target customers ⤷ You get reach without building your own network. Joint innovation ⤷ Collaborate with an incumbent to launch a new product ⤷ You share costs and inherit their credibility White-label supply ⤷ Sell your product under an incumbent’s brand ⤷ You scale quietly, while learning how the market really works Adjacent alliances ⤷ Enter through a related industry ⤷ Bypass the strongest defences Anchor partnership ⤷ Land one marquee partner ⤷ Their endorsement signals trust and opens doors The question is: how do you know if you have a real chance? Use the Entry Equation. Success Score = (Distribution × Incentive × Differentiation) ÷ (Switching + Regulatory + Capital) Score each factor 1–5 (5=Excellent): • Distribution Access • Incumbent Incentive • Differentiation • Switching Costs • Regulatory Barriers • Capital Intensity Interpretation: 0–5 = Low viability 6–10 = Conditional entry 11–15 = Strong entry Need an example? An EV battery startup partners with a Tier-1 auto supplier. Here's the assessment: • Distribution = 4 • Incentive = 5 • Differentiation = 5 • Switching = 3 • Regulatory = 4 • Capital = 3 Score = (4×5×5) ÷ (3+4+3) = 10 Interpretation → Conditional entry The path forward: reduce regulatory drag or switching pain This is how experienced CEOs think about market entry. Not just, “Can we compete?” But, “Who can we partner with to get through the defences?” Remember: Go-to-market partnerships aren’t a growth lever for new entrants. They’re the only way in. --------------------------- Was this helpful? Get cheatsheets like this each Wednesday. Subscribe to my free newsletter: https://philhsc.com ♻️ Repost this to help a founder or CEO assessing a new market ➕ Follow me, Phil Hayes-St Clair for more like this

𝗦𝗘𝗕𝗜’𝘀 𝗥𝗲𝗰𝗲𝗻𝘁 𝗘𝗻𝗳𝗼𝗿𝗰𝗲𝗺𝗲𝗻𝘁 𝗔𝗰𝘁𝗶𝗼𝗻 — 𝗔 𝗧𝗶𝗺𝗲𝗹𝘆 𝗥𝗲𝗺𝗶𝗻𝗱𝗲𝗿 𝗼𝗻 𝗔𝗜𝗙 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 SEBI’s latest order imposing a ₹29 lakh penalty on trustees and other stakeholders of an AIF for lapses in disclosure and investor grievance redressal has captured the attention of the alternative investment community. What stands out is that the action relates to a fund that had already been wound up — a clear signal that compliance responsibilities are not bound by the fund’s active life cycle. This underscores SEBI’s consistent focus on ensuring transparency, investor protection, and accountability across all stages of a fund’s existence — from launch to winding-up. For fund managers, trustees, and key functionaries, this is a moment to pause and reflect on a few key takeaways: - 𝙋𝙡𝙖𝙘𝙚𝙢𝙚𝙣𝙩 𝙈𝙚𝙢𝙤𝙧𝙖𝙣𝙙𝙪𝙢𝙨 must be accurate, comprehensive, and regularly updated — investors deserve full clarity - 𝙄𝙣𝙩𝙚𝙧𝙣𝙖𝙡 𝙨𝙮𝙨𝙩𝙚𝙢𝙨 should facilitate timely redressal of investor grievances, even post-distribution - 𝘼𝙘𝙘𝙤𝙪𝙣𝙩𝙖𝙗𝙞𝙡𝙞𝙩𝙮 doesn’t end with the entity — individual responsibility is now firmly in focus SEBI’s proactive monitoring and retrospective scrutiny reflect a maturing regulatory landscape, one where governance, documentation, and process integrity are non-negotiable. As the AIF industry continues to scale, it is imperative for all stakeholders to adopt a forward-looking approach to compliance: one that is not just reactive to regulations, but aligned with best practices and investor expectations. To conclude, sound compliance isn’t just about avoiding penalties — it’s about safeguarding reputation and fostering trust in India’s capital markets! ANB Legal I Neha Londhe #SEBI #AIFCompliance #InvestorProtection 

USAID was involved in supporting Kenyan startups through various funding initiatives. Notable examples include: BasiGo: Received a $1.5 million grant to pilot and scale electric buses in Rwanda. Maisha Meds: Secured $5.25 million in scale-up stage 3 funding from USAID's Development Innovation Ventures (DIV). Kentaste Products Limited: Launched a $100 million investment to enhance Kenya's coconut industry through processing and value addition. SOLARGEN TECHNOLOGIES LTD. Technologies: Obtained $2.5 million in quasi-equity financing from the USAID Impact for Northern Kenya Fund to implement innovative solutions like solar-powered water purification systems. PULA: Granted $1.5 million to deliver innovative agricultural insurance through technology. Additionally, the U.S. International Development Finance Corporation (DFC) has provided loans to Kenyan companies: Ilara Health: Received a $1 million loan. M-KOPA: Provided with $51 million in debt financing. Twiga Foods: Disbursed a $5 million loan. The current ongoings at USAID underscores the necessity for Kenyan capital stakeholders to explore diverse funding avenues to sustain and grow the country's entrepreneurial ecosystem. There is a video of Jeff Bezos discussing that one of the main reasons for the U.S.'s entrepreneurial success is its exceptional access to risk capital. This got me to reflect on the current mechanisms of capital in Kenya and the need for innovation in the industry to meet the demands of a clearly lucrative market. For instance, the Kenya Bankers Association had the Sustainable Finance Initiative back in 2015. The aim was to equip the financial services sector with the tools necessary to balance business goals with economic development priorities and socio-environmental concerns. Building upon such initiatives, Kenyan banks could collaborate to form a local version of Silicon Valley Bank, distributing risk among themselves while fostering innovation. NSE could develop instruments to attract public investment in startups. By partnering with early-stage investor firms such as Antler, Baobab, and Endeavor, the NSE can identify companies seeking Series A or Series B funding. VCs often rely on private equity sourced from institutional investors like pension funds or insurance firms, which ultimately represent the public's money. Therefore, directly engaging the public to invest in a portfolio of high-risk, high-reward ventures could be a viable strategy, allowing individuals to make decisions aligned with their risk appetite. Additionally, pooling resources from multilateral development finance institutions like AfDB or Afreximbank could provide substantial funding for high-risk, high-return investments. Ultimately, we need to develop mechanisms that enable investment in local enterprises—be they zebras, camels, or giraffes. Through such efforts, Kenya can discover and define its own 'mythical unicorns,' to create a self-sustaining startup ecosystem.

Top 10 KPIs VCs care about across stages: Aumni’s latest analysis looks at over 10,000 data points across portfolio companies of all stages to reveal top metrics sought by VCs. It has been found that 1. Revenue, net burn rate, FT headcount, and gross margin are frequently requested  2. Most venture firms request 6-9 metrics per quarter from each PortCo  3. Cash ranks high in the early stages but becomes less critical in the later stages 4. Operational metrics take up 50% of the top ten list at Series D+ Point to note: 1. You can see that the two cash metrics in the top ten list (cash-on-hand and cash runway) are requested far less often across stages. Both metrics fell from an average combined ranking of 3.5 out of 10 in the seed stage to scarcely staying in the top ten by Series D+. 2. As expected, metrics that focus on operational efficiency are requested more frequently later in the startup lifecycle.   Gross margin, total OpEx, EBIT, bookings, and debt balance all become a frequently requested metric as companies enter growth and exit stages. Please check the comment section for the detailed note by Aumni. ~~~~~ ♻️ Found this helpful? Repost it so your network can learn from it, too. And follow me, Fazlur Shah for more content like this. #startups #entrepreneurship #venturecapital #investing