Fund

A pool of committed capital with a fixed life — typically ten years — that a VC invests and then returns to its LPs.

Example

Fund III, $200M, raised in 2024.

Fund size dictates cheque size and required outcome. A $500M fund usually cannot afford to care about a company that will exit for $30M.

Limited partner (LP) — The investors IN a venture fund — pension funds, endowments, family offices, wealthy individuals.
Fund returns / power law — Venture returns are dominated by a tiny number of enormous winners rather than by average performance.
Reserves — Money a VC fund holds back from its total to support existing portfolio companies in later rounds.
Venture capital (VC) — Professional investors who manage a fund of other people's money and invest it in high-growth startups in exchange for equity.

How a VC fund actually works — A VC is not a person with money. They manage a fund with its own investors, and that single fact explains almost everything they do. (15 min)