VC 101 - Learn | Carta Classroom

VC 101 | CARTA CLASSROOM

What’s a venture capital fund?

Venture capital can be fascinating yet complex—but there’s help. VC 101 is your guide through the complicated venture capital landscape, making the hard stuff feel easy, giving you a better understanding of VC, and a foundation to help you build your own fund.

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Chapter 1: What's a venture capital fund?

Chapter 2: The venture capital industry

Chapter 3: How VC funds are structured

Chapter 4: Limited partnerships & management companies

Chapter 5, pt. 1: VC regulations

Chapter 5, pt. 2: VC regulations

Chapter 5, pt. 3: VC regulations

Transcript

So if you’re thinking about starting a VC fund, there’s a bunch of foundational details about what funds are and how they work that you’re going to want to know from the very beginning.

My name’s Rita and I’m the head of the venture Capital business development team here at CADA, and I also teach Venture Capital Funds at UC Berkeley School of Law. In this first lesson, we’re gonna start laying that foundation with some of the most important basics.

Key Points

To kick it off, let’s go ahead and zoom right in on that first one. What exactly is a venture capital fund? A fund is a legal entity that pools money in order to invest in assets. The fund then owns those assets until it sells them. A fund is just a legal entity that collects a bunch of money to invest that money in a bunch of stuff.

A VC fund is different from a VC firm. These two entities work in tandem with each other, but they’re not the same entity. The VC firm is the management company that rents office space, employs analysts, subscribes to financial publications, etc. A successful firm may operate several different funds at one time.

What’s the difference? The VC firm is the company, and the fund is a legal entity that pulls money from third-party investors. Money comes from investors who expect that the fund’s investments will generate a profit.

Recap

  1. Two entities so far: the firm (management company) and the fund (pooled investment vehicle).
  2. The fund is typically formed as a legal entity called a limited partnership.
  3. Investors become limited partners (LPs) when they contribute capital to the fund.
  4. The fund is managed by a general partner (GP), which is a separate legal entity.

It's worth noting that by legally separating each fund, you limit the liabilities of that fund to one specific place.

Next lesson: dive into the venture capital industry and how it works.

Your guide to launching your firm

Starting a venture capital firm can be complex. That’s why Carta built a playbook to help managers build their funds every step of the way.

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7 videos • 43m total length

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