Raising a VC Fund as a Solo GP? 4 Tips To Get You Started

Sometimes the non-traditional route leads to the best results.  

Zach Coelius likens the entrepreneur/capital raising journey to that of a Roman gladiator. In the arena, there are the gladiators facing unthinkable challenges, and there are also the spectators. Zach has spent time in both parts of the fundraising arena: funding and raising. He jokingly refers to himself as a “washed-up founder,” having spent the past 20 years starting a variety of different companies. 

“You can claim you sleep as an entrepreneur. But in reality, you don't. You just fight and sweat and bleed,” Zach says. “And the thing is, every problem you solve you immediately escalate to the next harder problem.”

While there aren’t actual tigers on chains awaiting founders, there are spectators standing on the sidelines: investors. These days, Zach finds himself on that side of the arena.

“Being a VC is like being one of the douchebags in the stands who bets on which gladiator is gonna win and which one's gonna die. It's so much easier.”

His career has now toured all aspects of the funding world. Following his successful exit from one of his startups, he fell into angel investing via syndications. After some time in that world, his connections led him to VC, but not as part of a group. Organically, Zach’s connections and reputation let him function as a solo GP (general partner). 

On an episode of the How I Raised It podcast, Zach shares four tips for how to get your foot in the door and become a solo GP — without spending a dime of your own money. Hint: Like many things in this space, relationships matter. 

1. Focus on founders first

Want to become a VC? You’d better ingratiate yourself with some VCs, right? According to Zach, not necessarily. 

The problem is that most people who are entry-level investors go to VCs first. And unless you’re a VC’s very best friend, they’re probably not giving you good quality deals. VCs are keeping the best deals for themselves, and unless you have a sizable chunk of change to kick in, you probably won’t have access to the cream of the crop. 

Don’t have a trust fund or riches from a successful exit ready to spend? Zach has a better — and cheaper — suggestion: Make friends with founders. Then, help them out.

This requires lots of networking, but if you can bridge the gap between founders and VCs, you’ll be doing the founder a big favor. And if you’ve been helpful at a critical time, you’re more likely to reap the rewards and get included in the deal.

But don’t make it a quid pro quo. No one likes being bound by a strict agreement. Instead, it’s more of a “you get what you give” situation. Founders don’t want to feel like you’re pinning them down, so keep it casual. 

This leads to his next big tip: offering leveraged favors. 

2. Leverage favors

Want a friend? Be a friend — to both founders and VCs.

Being a friend to a founder involves helping them out with their pain points, such as finding capital. Being a friend to a VC involves sending them the best deals you find on the market. And right there is an opportunity to make all the difference for both parties.

Zach explains this in more detail: 

“Usually when I first meet a founder I'll help out a little bit. Then, if they want more, they're gonna come back for more. And then I'm like, great, you want my help? I need to be an advisor,” he says. 

Even if a relationship doesn’t turn into an advisorship, Zach’s still able to help founders in other ways.

“I'm always happy to make capital introductions for good companies. If a company is good [and] I think that the people that I'm sending it to will be excited that I'm sending it to them, the VCs are going to say thank you for sending me this deal. Then I’m doing a favor for my friends who are VCs.”

In turn, Zach is often invited to get a percent carry on the deal, and that’s how he turns relationships into his own personal gain. 

It’s common in the industry to have someone ask to “pick your brain,” which is sometimes code for “provide free consulting.” Zach recommends avoiding that. Use whatever free information or resources that person offers, but when you go to someone needing something, offer something in return. It could be as simple as an email intro to a vendor or client, or help finding funding. Either way, be useful, not a drain. 

“If you're out there doing favors for people where it doesn't cost you much, sending an email, making a connection, giving them some advice or doing something that's super valuable to them (but doesn't cost you a lot of time) you can pay it forward all day long,” Zach says. “That has come back in spades for me in terms of access to deal flow and getting to be in the right rooms.”

3. Lean into the strange

Picture this: A founder pitches you an idea and your first instinct is a quick “no way.” But the idea keeps resurfacing in your mind. It sticks with you, and you catch yourself adding little “what if” scenarios to the concept. 

Zach pays attention to these sticky ideas — even if they’re not perfect at first glance.

“It turns out that the decisions I make at the edges have tended to be where my biggest outcomes are,” he says.

Zach talks about a conversation with Uber’s Travis Kalanick. He told Kalanick what a great idea it was, but had to point out what issues he’d face with the taxi lobby. Kalanick responded with, “I’m a fighter,” and indeed, he proved to be one. 

“It taught me a lesson: When you see a company that has the potential to add an incredible amount of value, but there are some idiosyncratic reasons why you don't think it will work or something that makes it weird … Those are the things you really should lean into,” he says. 

Zach also invested in MUD/WTR, a CPG mushroom tea company, while knowing nothing about consumer packaged goods. He reached out to friends who did have CPG experience, and all of them encouraged him to take the deal. Even though mushroom tea might seem like a bad deal on the surface, it’s been a big success for Zach — and another pro for picking deals that might seem unusual. 

4. Don’t just raise — deploy

When you’re trying to prove yourself as a solo GP, it might feel like building the highest dollar fund is the most important thing. Zach argues the opposite. Rather than stockpiling money for an impressive final number, he pushes new solo GPs to deploy. 

The more funds you deploy, the more companies you help become successful. As they grow from that success, they’re likely to seek another round of funding. And if you did a good job helping them with their first raise, they’ll probably come back to you for a second raise. 

“Try to figure out how to get access to capital to build a track record, and then leverage that to more. Over time, the track record accumulates, but I can keep deploying and keep doing the work,” he explains. 

In the end, it all comes back to relationships. The more you can help VCs, founders, and the startup community as a whole, the more you’ll build your name. Leading with relationships, not transactions, will facilitate beneficial transactions for all parties involved.