How I Raised My $11.5 Million Venture Capital Fund

Your richest contacts are not necessarily your biggest checks

Elizabeth Yin


A pink piggy bank in mid-air above someone’s hand.
Photo: PM Images/DigitalVision/Getty Images

AAbout a year ago, we announced that we finished fundraising for Fund 1 of Hustle Fund. Hustle Fund is my new venture capital firm, and our Fund 1 is an $11.5 million fund dedicated to investing in pre-seed software startups. My co-founder Eric Bahn, general partner Shiyan Koh, and I could not be more grateful to our investors for their support and to so many of our friends and family who helped us with this process.

I’ve written before about what it’s like to start a new venture capital fund. But, a lot of people have asked me about how we actually raised it. Surprise, surprise — we ran our fundraising process using all the fundraising tips I give away on my blog.

Before getting into the specifics of these tips, I need to spend a minute explaining a bit about venture capital (VC) structures: VCs raise money from other investors called limited partners (LPs). These investors can be individuals, family offices, corporations, or institutional funds that invest in VC funds.

Here’s how we raised our fund (and some learnings):

1. We talked with a dozen fund managers before starting

If you are considering raising a VC fund, I would highly recommend talking with a ton of new fund managers before jumping in to make sure this is what you want to do and get tips and advice. The single biggest tip that I heard over and over from my peers was that they felt that they had spent a lot of time courting large institutional fund investors when they should have spent more time trying to find family offices and individuals and corporates to pitch. We took this advice to heart and ended up only meeting about 10 institutional investors once or twice to build relationships with them—potentially for down the road.

In the startup-fundraising world, this is analogous to raising from angels versus VCs. If you’re super early, meeting with angels is likely going to be the more successful fundraising path. VCs will take meetings with you, but you want to make sure you are not spending too much time with people who will most likely not be investing right now. That being said, it can be good to build relationships for down the road. This is a time trade-off that every founder — both product founders and new fund managers — have to make.

2. We sized up motivations

This leads me to my next point. It’s important to size up an investor’s motivations, and this applies when fundraising for a product startup as well. When you’re meeting with an investor, try to understand why they are investing, in general.

There are many, many reasons why someone wants to invest money in companies:

  • To make money
  • To not lose money
  • To take large risk but potentially very high return
  • To get promoted/move up the professional ladder by making a good investment
  • For fame and glory and bragging rights
  • To learn about a business or industry
  • To network with other investors or the founding team
  • Etc.

Reasons #1–4 seem similar, but they are actually quite different. Some people are motivated by making money. Others are motivated by wealth preservation (to not lose money). An example of this is that many large institutional fund-of-funds manage retirement plans. Their goal is to preserve the wealth of the everyday hardworking people who entrusted their savings to them. Think about it: If you are working for San Francisco Muni (the city’s public transportation) and put your hard-saved earnings from your salary into your company’s retirement plan, the last thing you want to hear is that your retirement plan lost all your money by investing in some dumbass new fund manager who invested in dogshit startups. Most retirement plans will not be investing in unproven, first-time fund managers.

Others don’t mind losing money if there’s the potential to make a ton of money — e.g. you invest $10,000 and it has a 95% probability of being entirely lost but there’s a 5% chance that it could make $1 million.

Then, there are lots of non-ROI reasons to invest. To learn about an industry or a new technology. To brag to friends. To network with other investors or the founders. These are all equally great reasons to invest.

Most people have a blend of reasons, but it’s important to figure out what that blend is.

In our first meetings with all the investors, we tried to assess what motivated each person we spoke with to get a sense of whether an investor would likely be a good fit. (More on this later.)

3. We prioritized speed over dollars

Our focus for this raise was on speed. According to Preqin, in 2016, it took first-time fund managers an average of 17 months to close a first fund. For us, we decided that we really wanted to raise our fund in less than a year (and ultimately closed in 10 months). So if it meant raising only $5–10 million versus $10–$20 million in twice the time, we wanted to opt for less money at a faster pace. This essentially dictated our strategy to raise primarily from individuals, because they can make decisions quickly.

The main reason why speed mattered to us is that per SEC rules, we could not market our fund while we were fundraising. As marketers, we wanted to start actively marketing Hustle Fund as soon as possible.

4. We iterated our deck—a lot

Storytelling is incredibly important for any fundraise. As a new VC, we had no brand and no product to show. In most cases, there’s nothing that differentiates a new VC from all the other fund managers.

The first version of our deck basically talked about how we had some edge because we went to “fancy” schools, worked at “fancy” jobs, and were already active seed investors. I remember my friend, Tim Chae, basically looking at that slide and saying that every fund manager on the fundraising circuit had everything we had. And he was right. The hundreds of new VCs who are out pitching right now all went to some permutation of fancy schools and/or worked at fancy companies and/or have done some fancy investing. These are not differentiators.

We quickly realized that we needed to be able to tell a differentiated story. For us, our biggest differentiator is around our model of how we invest—namely, we look heavily at the speed of execution in investing the bulk of our fund. This was not only a story around being different but also around why our past experience has led us to this model, and why we are uniquely qualified to invest in this way.

It took us about 20 versions of our slide deck to hit this story right. Thanks to so many people who gave us feedback on our story and especially to Tommy Leep, who helped us get our story on the right track early on. If you get the chance to work with him on your pitch—whether you’re a fund or a startup—do it.

5. We built momentum by packing in lots of meetings

I personally did 345 fundraising meetings between July 9, 2017 and May 25, 2018.

In the past, I’ve written about how to generate fear of missing out (FOMO) among investors when you’re raising for your startup. In the beginning when you have raised nothing, it’s hard to generate FOMO. Whether raising money for a startup or a VC, no investor wants to be the first check-in. So the best way to show fundraising momentum when no money has been committed is to pack in a lot of fundraising meetings. This makes it easier to generate excitement when potential investors hear that other investors are doing second meetings with you. And you also want all investors to end up committing to you around the same time.

Once you get commits, then you can start talking with other potential investors about those commits, which generates even more commits. The key is that you need to constantly be meeting with people.

Here’s a graph of all my meetings per week between summer 2017 and spring 2018:

Screenshot: Elizabeth Yin

Note: This doesn’t include all the meetings that Bahn did. We often did first meetings with potential investors individually. So collectively, our total number of meetings was much higher than 345.

You can see this Google spreadsheet of all my meetings to get a sense of what I did week to week.

You can also see from this graph that I began to run out of leads. This is the most important thing: Don’t run out of leads! (More on that below.)

6. We started with a low minimum check size to close investors quickly and raised it over time

In the beginning, our minimum check size started at $25,000 and eventually, it went all the way up to $300,000 (for individual investors). We did this to generate quick commits and create more FOMO.

Product startups can do this, too. I did this with my company LaunchBit — our smallest check size back then was $5,000, and then we increased the minimum.

7. We qualified investors on first meeting

As I mentioned above, we were looking for investors we could close quickly. For individuals at smaller check sizes, this often meant just one to two meetings. Much like with startup fundraising, if someone was taking too long to decide relative to the number of decision-makers involved and the potential check size, then that investor was probably not a good fit for our fund. You want to be raising money from people who have bought into what you are doing, not people who will be an uphill battle to convince.

There were some folks we met who just were not quite ready to invest either because they were new to/not comfortable with the VC asset class, or they were not yet bought into us or Hustle Fund as a first fund. And that was perfectly fine. The important thing was just to figure that out quickly and move on and generate more leads and meet more new people.

I soft pitched everyone at every party I went to. I soft pitched my optometrist during my eye appointment.

I think one of the top mistakes I made in fundraising as a product startup founder, and one of the top fundraising mistakes most first-time fundraisers make, is in spending too much time with people who just will not close quickly enough. It’s tempting to spend time with any investor who will take a meeting with you, and it often seems like it’s really hard to generate new leads. But now that I’ve done this a few times, the better approach is to try to keep looking for new, warmer leads rather than to feel stuck warming up cold ones.

8. We generated lots of leads (in the beginning) using brute force

Building on my point above, I think one of the top reasons founders (or fund managers) spend too much time on meetings with people who are clearly not going to invest soon is that they don’t know where to find more leads. If you’re a product startup and you’ve exhausted a typical list of VCs (such as this one from Samir Kaji at First Republic), you’re probably wondering, “Now what? Where do I go now to raise money?”

When I was a founder, this was certainly the mindset I had. My perspective now, though, is that the world is filled with infinite money sources, and it’s my job to find the right matches as quickly as possible. This mindset also takes the pressure off tremendously. As a founder, I felt a lot of pressure to close a particular person, because it just seemed like there was a finite pool of startup investors. Now with a more seasoned view, I feel no pressure at all, because there are actually a lot of people who are interested somewhere in the world—you just need to find them.

This means that you have to be generating a lot of leads and doing lots and lots of first meetings (see graph above). So how did we generate leads?

We used a pretty standard B2B sales playbook to do so:

8a. Get referrals

We started by approaching friends and acquaintances and asked everyone if they were interested in investing or knew one to two people who might be interested in chatting with us about potentially investing Hustle Fund. This actually allowed us to branch out pretty quickly, because people know a lot of people. And those people know a lot of people! So even if you are starting with someone who does not have any money or is really not interested in investing in VC, by asking for just a couple of solid intros you can actually find some interesting contacts.

I want to highlight the ask for these introductions. The ask is not: “Hey if you know anyone whom you think might be a good fit…” No! Don’t do this! People will just brush you off and not think about your ask. You want each person you meet to legitimately think about the best-fit person in his/her network out of the thousands of people they may know. Having a specific, simple ask to just think about one person in two minutes is a doable and realistic ask of everyone you know, no matter how close you may be to them.

The other thing that I think people automatically assume is that in order to have a good network, you need to be someone like Ashton Kutcher. That certainly helps, but it’s not necessary.

These are all the people I made this referral ask of:

  • Family
  • Friends
  • Friends’ families
  • Former co-workers
  • Former founders I’ve backed in the past or present
  • People I met at events where I spoke
  • Organizers of events where I spoke
  • Where appropriate, I even asked some founders who pitched me at Hustle Fund on their businesses

If you think about it from this perspective, if you are in the tech industry, there are so many people you can pitch or get referrals from. Every tech worker is fair game. Do you know how much tech workers make per year? So. Much. Money. Do you know how many of them know other tech workers? Those are the only people they hang out with. Any startup founder you know—no matter how much they are succeeding or flailing — knows investors who have backed them or other startup founders.

On our $11.5 million fund, most of it, including all of our largest anchors — special thank you to Shanda, LINE, and Naver, who came from referrals—did not come from within our direct network of people we already knew. Some of our investors are referrals who had other referrals.

So how do you soft pitch someone? (And you should be soft pitching everyone you meet.)

You know when people ask you, “How have you been? What are you up to these days?” That’s your window to soft pitch. “Great! I started this new fund. These days, I’ve been, ya know, raising some money for it. So if you or a couple of friends you know are interested in taking a look, I would love to chat!” Gauge the reaction. If it’s positive, then try to set up a more formal meeting to actually pitch. If it’s negative, then ask for referrals.

Using a Cialdini-esque approach, you want to ask for the moon. People will either fulfill it, which is great, or if they can’t, they feel bad, want to be helpful, and will likely help you with whatever smaller ask you have. Referrals are that smaller ask and really were clutch in helping us raise our fund.

I soft pitched everyone at every party I went to. I soft pitched my optometrist during my eye appointment. Under the Affordable Care Act, you now basically get a free meeting to pitch a health professional while getting a checkup. Your doctor, dentist, optometrist, lawyer, accountant—these are all people you can pitch or ask for referrals from when you meet them (and they all have money).

We asked some of our closer friends for a ton of referrals (way more than the one to two that I mentioned above). They were so incredibly helpful. I probably owe them my firstborn child, but I’m not sure they would really appreciate the tantrums.

This referral strategy is a lot of work and requires a lot of meetings, but it’s a way to get started and get tapped into networks you don’t have.

8b. Throw parties, brunches, dinners, and events

Some of our friends were a bit uncomfortable doing introductions for the purpose of fundraising. Money is a funny topic that people don’t like to talk about very much in the U.S. Some people view investment opportunities as opportunities and other people view them as liabilities (as mentioned above).

So, an alternative approach we used sometimes to get referrals was to ask our friends to throw parties, dinners, and brunches and invite people we wanted to meet. So, if your friend is connected to someone you want to meet, an alternative ask is to ask your friend to throw a dinner or brunch (you pay for it) and invite both you and that person you want to meet. Then you can soft pitch directly to the person you want to meet without your friend having to feel awkward.

Interestingly enough, I found that entrepreneurs and investors were very comfortable doing direct introductions for us, while my friends who have always worked at big corporate jobs (and have never raised money before), were less comfortable. And that’s okay. The party/dinner/brunch route is an alternative path to the same result. We ended up attending a lot of these events that are not reflected in the meeting count on the graph above.

Like almost every raise I’ve seen, you’re just not hot until the end.

In addition, we also threw a lot of these events ourselves, and we invited both people we were talking to and committed investors to those events. These events were helpful in closing investors as well.

Talks at conferences were also a good way to show off knowledge and give people a sense of how we thought about investments. We have ended up meeting a number of potential LPs from events and conferences where we gave talks. Events allow you to be a thought leader.

8c. Do your own pattern matching

Once we started getting investors, we noticed some patterns emerge. Even though we had focused our raise primarily in the Bay Area and didn’t travel much, a lot of our investors are from outside the Bay Area. We conjectured that there might be much stronger interest outside of the Bay Area, where access to tech startups is limited.

As it would turn out, almost half of the money in our fund comes from Asia even though we didn’t make any trips out there.

But patterns can also be thesis-driven. Another pattern we found for Hustle Fund was that anyone who had been a mentor for or a manager of an accelerator really resonated with our thesis and invested in our fund.

It might be worth honing in on a pattern and trying to find as many people who fit that pattern.

Speaking of patterns, one interesting side note observation is that we had really poor success in converting female investors (despite actually investing in a lot of female founders both in the past and with Hustle Fund). In Hustle Fund 1, less than 5% of our investor base is made up of women. (Meaning we spoke with a woman from that entity or household.) But we have pitched both men and women. I’ve had many other friends who have raised money for funds or startups who have noted similar observations: Women are seemingly much more conservative with their investments.

Just as a side tangent, it’s fine if people don’t want to invest in Hustle Fund per se. But, if professional women with some level of means are not taking some financial risk, they won’t achieve the same level of financial success as their male counterparts. Think about this: We talk every day about how women don’t make the same amount as their male counterparts at all these tech companies. But we don’t talk at all about how women are left behind on investments. Every rich person knows that you don’t make money on salaries; you make most of your money on investments. If you were in the seed round of Dropbox or Google with just a few thousand dollars invested, you wouldn’t even be concerned about a salary.

8d. We made a video

We made a video (see to explain who we are. This was a bit of a gamble because we spent $13,000 all-in on producing this video. That being said, we thought it was worthwhile, because we believed we could stand out if we did the video well.

This gamble has paid off. In part, I think it’s because no other VC (that I know of) has a video on their website. So it may be worthwhile to pay for an asset that no one else has in order to stand out.

9. Your richest contacts are not necessarily your biggest checks and vice versa

Building on a prior point about soft pitching anyone and everyone, it turns out there was no correlation between wealth and check size.

This was an interesting learning for us. In the beginning, we made a list of our richest friends and how much we thought each could invest. We were so wildly off in meeting these numbers. On the flip side, some of our friends who are not super rich surprised us and invested substantially.

There are so many reasons for this: A) Making a lot of money in itself doesn’t mean that people have a lot of money. They could have a big mortgage. They could spend a lot of money. They could have a lot of capital tied up in other projects or investments. B) There are also a lot of people who don’t make a lot of money but are very good at saving it and investing it and secretly have a lot of wealth. The Millionaire Next Door is a good illustration of both of these points. C) Some people come from wealthy families and you just have no idea they do. D) People also have varying levels of bullish-ness on you, your thesis, and your asset class. People also have varying levels of risk/reward tolerance.

It’s also important to note that sometimes people who are not/don’t seem like angel investors can become angel investors for you. Andy Cook talks about how he brought in new investors who had never invested in startups before into his round. We did the same. Just because someone isn’t already an angel investor doesn’t mean that they couldn’t be.

This is why our grassroots strategy of taking so many meetings worked so well—we just never knew who would actually be interested in investing. And we could not find any way to qualify people apriori. This is why it’s so important to pitch anyone and everyone. It’s hard to know who will bite and who won’t.

10. We used a CRM to manage our process

This process requires a customer relationship management system (CRM) because you need to make sure that leads are not falling through the cracks. We invested in using a CRM right away to track conversations and move people through our pipeline.

This also made it easier for Bahn and me to divide and conquer. We would take our own meetings with individuals and regroup for second meetings and beyond. And we could both see who was talking with whom so that we didn’t start different conversations with different people from the same fund or approach the same people.

More importantly, it was critical that we maintained discipline over all those months to keep the CRM up to date.

11. You’re not hot until the end

This applies to both startups and funds. Fundraising is always a slog in the beginning because you’re trying to generate lots of leads and qualify them.

This is a graph of what our fundraising looked like:

The blue line represents our soft commits over the months (verbal or written email commits). The red line represents money we actually closed legally (signed docs). As always, “soft commits” are a bit more ambitious than actual commits, but in the end, they should converge (or come close).

As you can see, we averaged getting about $1 million per month in soft commits for the first six to seven months to get up to around $6.5 million in commits, which we closed in December 2017. If you follow the red line, you can see that there is a surge of $5 million at the end, which came together in the last couple of months of our fundraising process.

Like almost every raise I’ve seen, you’re just not hot until the end.

12. This all sounds easy, but it takes hustle and a village to do this

The fundraising process I’ve outlined above is executable and accessible for anyone. And it actually sounds easy. Just do a bunch of meetings and ask everyone for intros or money, right?

But wrapping up this post, I’ll leave you with a couple of final thoughts.

12a. It takes lots of hustle and lots of meetings

In July 2017, when my new baby was about seven weeks old, I decided to quit my prior job in the middle of my maternity leave and started Hustle Fund shortly afterward. That summer, during the day I would leave him with my parents, and I would go from meeting to meeting, stopping to pump milk in parking lots or at tech companies’ mothers’ rooms. At night, I would work on decks and update our CRM. I would sleep about four, sporadic hours a night as the baby would wake up every two to three hours to drink milk. I got through most days on lots of coffee and adrenaline. But no matter how tired I was, it was important to go into each and every meeting just as excited as ever.

I don’t mention this schedule to brag about my hustle, but just to paint reality. It really does take a lot of work to do lots and lots of meetings. It’s important to work smart, but for some things, as smartly as you work, there is no shortcut for just lots and lots of hard work. And know that as hard as it is, you’re not alone.

12b. It takes a village to go anywhere

To start this fund, I leaned on a ton of people.

While the small section here doesn’t do justice to my gratitude, I did want to highlight just how many people my awesome co-founder and I roped into this raise. (I’m also incredibly grateful to have a fantastic co-founder in Eric and now Shiyan!)

  • Our roughly 90 investors in our fund (they occupy way fewer LP slots, but there are at least 90 individuals, spouses, family members, companies, and people with a stake in this)
  • Past founders I’ve backed, who have introduced me to their investors; one successful founder even generously offered us her PR agency and to foot the bill
  • Current founders who went through their Rolodex in trying to help us connect with their other investors, VCs, and/or rich friends
  • VC friends who supported us with personal investments, investments from their funds, introductions to their investors
  • Friends and family who came over to my house to cook food, bring over take out, buy us food—it was pretty incredible not to have to worry about food for a while.
  • Friends and family who housed me in their spare bedroom or their couch on my fundraising trips
  • Friends and family who introduced me to all kinds of rich and well-connected people
  • My blog readers who introduced me to their network
  • My own immediate family who took care of my kid(s) every week for months
  • And big props to my spouse JJJS as well as Eric’s spouse and Shiyan’s spouse for really bearing the brunt of all the work that goes into starting a fund

There were hundreds of people who helped us get this thing up and running (and we are just at the beginning). And I’m so very thankful to all of them for their generosity.

Fundraising is hard. It takes a long time, but don’t give up!

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Elizabeth Yin
Writer for

General Partner at Hustle Fund. Prev: Partner at 500 Startups, CEO/co-founder at LaunchBit (acq ‘14), Xoogler. SF Bay Area native.