A venture fund raises capital from limited partners and invests through a management organization. The fund’s agreements and time horizon shape its incentives. The source distinguishes the return received by limited partners from the gross outcome of the underlying investments.

A company must be attractive in the context of the fund’s portfolio. An investment can become a successful business while remaining too small to materially affect a large fund. This helps explain why an investor can reject an economically sensible venture without claiming that the venture has no value.

A return multiple describes proceeds relative to invested capital. It does not by itself state how long the investment took. Required multiples in early venture examples can incorporate a long holding period and the fact that many investments produce poor outcomes.

The finance slides distinguish an LP required return from a VC’s target gross multiple and a company’s exit valuation. Keep these quantities separate when solving a financing problem. A target multiple is an input to a negotiation model, not proof of the company’s fair value.

Gross proceeds a fund needs for LPs to receive 3x net with 20% carry, ignoring fees: fund size + (2 x fund size) / 0.8 = 3.5 x fund size.

Relay's stakes are carried through the seed (SAFE holders keep 73.5% of their stake: 12.5% becomes 9.19%), the Series A (x0.80) and a hypothetical 20% Series B (x0.80). Pro-rata proceeds ignore liquidation preferences, which lesson 32 adds.

An angel can invest their own capital, while a VC typically acts within a fund and an institutional process. Angel groups, seed funds and accelerators add further variation. Decision timing, contracting, follow-on capacity and governance can differ.

Investor selection should examine the actual person or organization. Ask about available capital, relevant experience, mentoring expectations and reputation with founders. A promised introduction has a different value from committed financing, and an investor’s capacity to support later rounds may matter under a downside scenario.

The funding material describes a funnel from many opportunities to a small number of investments. The diligence process seeks evidence about the management team, model, market, financing and exit. Different investors weight these factors differently.

A useful investment memo separates what is known, what the investor thinks and what must be true for the deal to work. The diligence plan should target uncertainties capable of changing the decision. Collecting documents without a decision question can consume time while leaving the central assumption untested.