What is the right VC fund strategy?


Alpha Returns Need Alpha Venture Capital Strategies

Fund Strategy Matrix Illustration by www.minimalvc.com

i. The Sourcing Wizard Strategy | Network & Reputation

GPs may go after sourcing strategy perfection, alongside their investment focus. This is mainly driven by outstanding hyperlocal networks, a persistent geographical advantage and a high-flyer fund reputation. GPs can rescale distributions throughout a sophisticated and well-tailored sourcing strategy.

ii. The Unique Niche Strategy | Knowledge & Expertise

A unique niche strategy is mostly driven by GPs with a specific domain expertise or a particular knowledge in a vertical, business model or any industry. This magic power will help GPs not only within the sourcing process, but as well in the deal winning against bigger serial funds.

iii. Fomo Hype Strategy | Opportunity & Dynamics

The fomo hype strategy is more real than ever. Just look at all the web3, metaverse and crypto funds popping up everywhere like mushrooms — fully loaded with cash and ready to shoot. This kind of strategy is a serious bet based on conviction that a certain hype turns into a sustainable and long-term play — keep in mind not all hypes and short-term trends stick around.

iv. Platform Play Strategy | Add Value & Innovation

It seems very apparent that platform and innovation plays make most sense for late emerging and serial funds with a certain fund size and higher AUMs, due to the fact that GPs need money and resources to build and operate platforms, which add a significant value to portfolio companies.

v. Invest Better Strategy | Judgement & Thesis

If you bundle excellent judgement, a bold out of the box investment thesis in combination with a unique deal access you can derive an outstanding invest better strategy, which will let GPs pick better deals further up the power law distribution curve. The overall goal is to achieve outsized results especially in early stage (as in late stage the crucial aspect is and will be access, because targets are visible), the strategy does not only cover entry investments which are only half of the equation, but as well the right follow-ons.

So is there a golden rule or a one-fits-all strategy?

No, of course not — that would be way too easy. It all comes down to the GP team, the underlaying investment thesis, fund seniority and of course the fund size. Merging all facets into a consistent master strategy is an art for itself. But keep in mind even the best fund strategy in the world is worthless, if you don’t have the right GP squad to execute upon it!



Venture Capitalist @ Minimal VC | Business Angel | Mentor | Entrepreneur | VC Advisor

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Marc Penkala

Venture Capitalist @ Minimal VC | Business Angel | Mentor | Entrepreneur | VC Advisor