Building a new venture fund is super interesting, deeply inspiring, and… far from easy. I know many young teams, who are raising their first fund and debating about the right fundraising strategy. At Begin Capital, we are always happy to share our own fundraising experience, but it is important to be objective and make comprehensive research. With this in mind I decided to analyze other VC funds, that were in the same position. Pulling historical data from Dealroom, I ended up with 186 first time VC funds that were launched in 2015-2020 worldwide. The dataset that I’ve got was not perfect: Dealroom’s coverage outside of North America and Europe is poor and also many smaller funds are missing. However, it was good enough to answer some of my questions and hopefully might be useful for other daring first time fund managers.

In September Pitchbook published an insightful research on the role of angel investments in the startup ecosystem. It is quite clear from the research that not only business angels are essential for early stage financing, but they also make a positive contribution to the long-term startup success. The probability to raise follow-on rounds appears to be materially higher for companies whose first investment came from angels. Probability of raising a follow-on round or reaching M&A/IPO Such a significant difference is impressive but might be not intuitively obvious. I have two hypotheses somehow explaining this fact: At early stages a syndicate of strong business angels could be more helpful. Angels usually have a strong professional background and can help startup with necessary first customer introductions. Even more than that, sometimes angels play such an active role in operational processes that they are hardly different from co-founders Startups that decide to skip business angel round and raise more funding from VCs at the start, usually end up with higher post money valuation. This puts more pressure on a startup’s performance and leaves less flexibility to make pivots. While the role of business angels is important and well known, surprisingly, I haven’t observed an active collaboration between angels and VCs. Business angels actively collaborate with each other: form angel networks and syndicates, network together through events and web chats

There is no doubt that inequality destabilises societies. Significant inequality in the distribution of capital is a bad thing, but what’s even worse is inequality of opportunities. My father was born in the USSR in 1948. A very talented young man who was hugely motivated to acquire knowledge and skilled in the exact sciences, he was unable to enter a good university as there was a quota (1-2 persons per faculty) for students of a Jewish background. But this did not prevent him from achieving success and becoming a well-known scientist, a Doctor of Engineering, teaching at the best universities and managing scientific projects of nationwide significance. In the 1970s, for instance, he supervised the preparation of one of the first Soviet computers for the Chess Olympiad versus an American computer. What does my family history have to do with a venture capital fund? A venture capital fund will never replace a founder, a leader, a team. Funds don’t create products, technology, brands. But we’re capable of helping talents, buying time and creating a level playing field. My father achieved success in spite of the difficulties and limitations, but I’m convinced that, if he had enjoyed equal opportunities with other talented people, he would have attained better results and his career would have developed at a faster pace. We live in the year 2020 but, unfortunately, the world is still full of stereotypes and limitations, which don’t allow many talented people to develop their business in the extent due. I really hate it when all people in a specific country are thought of negatively in terms of stereotypes, or depending on the actions of one or the other political leader or citizen. We have created Begin Capital in order to help Pirates, Winners and Robots to fly from Point A to Point B by air, not by foot, having spent a lot on overcoming barriers that are of no use to anyone. We are ready to invest in founders from all backgrounds, genders and walks of life.