“Cracking the Code: LPs in a Downturn Economy”

Emerging fund managers have had a tough time these past few years, and there is no telling when it will get better. Her firm just closed a $23.4 million Fund II after two years of fundraising. Wilkinson has no plans to raise a third fund anytime soon but has some advice for those who are, given the looming uncertainty in the venture market. After 300 conversations with institutional LPs, I had an aha moment in which I realized that I did not want to primarily work with institutions in the future. Individual investors are very different from institutional investors in all the right ways, in my opinion.

Emerging fund managers have been facing challenging times in recent years, with no clear indication of when things will improve.

Still, amidst this market winter, some were able to weather the storm. One of those individuals was Gale Wilkinson, managing partner at the early-stage fund Vitalize. After two years of dedicated fundraising efforts, her firm successfully closed Fund II, securing an impressive $23.4 million. Reflecting on the experience, Wilkinson described it as “enlightening.”

With the new funds, she plans to invest in a minimum of 30 companies. Already, checks have been cut for 50 companies from previous capital pools. Established in 2018, Vitalize focuses on future-of-work technology, with a typical seed investment ranging from $250,000 to $750,000. Additionally, their angel network has invested over a million dollars in 14 deals.

As for future fundraising plans, Wilkinson currently has no intention to raise a third fund anytime soon. However, she does have some advice for those who are facing the uncertainty of the venture market. In an exclusive interview with TechCrunch+, Wilkinson shares her thoughts on why she no longer wants to work with institutional investors, how to handle rejection from a limited partner, and her new approach to raising funds.

TC: This has undoubtedly been a challenging year for fundraising, both for firms and founders. What are some of the key lessons you’ve learned while trying to secure limited partners?

GW: I made one crucial mistake – I listened to others when developing the strategy for Fund II. The common advice was to raise a larger amount, target institutional investments, deploy capital quicker, write larger checks, focus on fewer deals, and expand the team to pave the way for future growth. Initially, I heeded this advice and set out to raise $50 million, with the ultimate goal of reaching a $100 million fund – which, in my opinion, is the largest an early-stage VC fund should aim for.

After engaging in 300 conversations with institutional investors, I had an “aha” moment. I realized that I no longer wanted to primarily work with institutions going forward. For over a decade, I have had the opportunity to work with individual investors, and it is one of the aspects of this job that I truly love. Individuals, in my opinion, have the ideal characteristics for potential investors – they are independent thinkers, forward-looking decision-makers, and agile in their actions.

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Kira Kim

Kira Kim is a science journalist with a background in biology and a passion for environmental issues. She is known for her clear and concise writing, as well as her ability to bring complex scientific concepts to life for a general audience.

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