How a VC Fund Structure Looks Like?

“The secret to successful hiring is this: look for the people who want to change the world.” –Marc Benioff, Salesforce CEO

There are approx. 1,300 Venture Capital funds in the United States. In recent years, the development of new business models has increased the need for capital injection, and this has raised the opportunity for new investment funds to emerge. Venture Capital has become an exciting career for investment bankers, consultants, engineers, developers, creatives and serial entrepreneurs, among many others.

A key element in VC funds is the human talent that is integrated into an organizational structure. Assets under fund management determine the size of the organization and the specialty in the roles. Megafunds (more than USD$1,000mm in AUM) will have a wide structure that covers all areas of opportunity. The main roles that emerging and growing VC funds need to have can be divided as:

1. Leadership team

It is composed by the founders, who take the lead in the strategic definition of the fund. They are members of the executive committee and the investment committee. Also, the different partners of the Partnership are included within this group.

  • CEO / Managing Partner: In addition to the investment responsibilities, this person usually performs administrative functions; including, financial, legal, fiscal, human capital, investor relations, relationship with government and civil authorities, etc.

2. Investment team

In addition to the management team, the funds have investment professionals who support these tasks. Some positions may be:

  • Senior Principal / Principal: Leads transactions from origin, to due diligence, to administrative closing of the investment. Also monitors portfolio performance and supports portfolio companies.

3. Operating team

Part of the team dedicated to add value to portfolio companies or develop management activities of the fund itself.

A. Business specialist:

Team dedicated to supporting the portfolio companies, whose objective is to generate value. Usually the profile of professionals are consultants, previous entrepreneurs or investment bankers. Their activities include:

  • Capital formation: Support entrepreneurs in the capital raising processes and financial monitoring.

- Product design focused on consumers and global businesses.

- Marketing and Communication for content creation and visual assets.

- User experience validation, focused on product market fit and growth.

B. Technical Specialists:

It is dedicated to improve and create the technological base of the portfolio. Activities include:

  • Analysis of data and problems using Machine Learning, predictive algorithms, and data visualization.

C. Fund Operations (managerial team):

Every fund requires internal administrative areas to develop its activities, the main areas are:

  • Finance: Manages financial and accounting control of the fund’s operations. Some positions are CFO, manager or analyst, and comptroller.

D. Advisors

External agents who provide consulting to fund managers or portfolio companies.

All previously mentioned roles receive a compensation for their work. They usually take a salary and a bonus that is paid from the fund’s management fee. Fund partners also receive a carry if the fund is successful.

Venture Capital’s fund structure will depend on its assets under management. In the United States funds manage on average USD$300mm, they usually have a simplified structure that includes:

  • Investments: An average of three GPs and three associates

The structure of a Venture Capital fund is extremely relevant, it’s all based on the talent of its people. Venture Capital funds are in sum a service company with diverse teams focused in bringing the best value to each company they invest.

Hector Shibata Salazar, adjunct Professor at EGADE Business School and Director of Investments and Portfolio at AC Ventures Fund

Ana Maury Aguilar, VC Investor at AC Ventures

ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.

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ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.

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ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.