Hey folks, Dawson here, and I hope everyone is enjoying some Christmas cheer. As I’ve been reflecting on the past year now in the CVC space, I thought it would be good to check in with some of you all. Recently, I have been consulting a friend on starting their own VC within their network. He wants to start a small fund, within the software space so he can leverage his own business through investing.

I have noticed more SMB owners / asset owners start to leverage strategic risk capital to accelerate their business. Should you start a venture fund within your company? Whether you’re a decision maker or not, it may be worth evaluating the opportunity to help your business grow in 2026. This past year, I have been navigating how to articulate the full scale value that venture investing brings to a business (strategic benefit vs. financial). With 2025 wrapping up strong (global VC deal value hitting $300 billion YTD, up 15% from 2024). But why bother? And how do you actually make it happen without getting tangled? Today, I’ll break down the upsides of launching your own fund, then walk you through a practical, step-by-step playbook. Backed by fresh data from Carta, NVCA, and pros like NFX, this is for my investor and exec audience eyeing the next level. Let’s dive in.

Why Start a VC Fund? The Big Catches

Launching a VC fund isn’t just about chasing unicorns—it’s a strategic play with serious perks for operators, angels, and execs like you. Sure, it’s risky (fund failure rates around 50% for first-timers), but the rewards? They can compound financially, or elevate your main business focus. Don’t get me wrong, I do not recommend investing in “losers” but a strategic investment that only returns your initial investment may have very well exponentially grown your main business (assuming your VC isn’t your main business). Here’s the data-driven lowdown:

• Autonomy and Ownership Starting your fund means having a conviction on your thesis, industry and culture. Emerging managers report higher satisfaction from this freedom, with many citing “ownership and autonomy” as top motivators. In 2025, 67% of new funds are $25 million or under, letting you stay nimble without governance hurdles.
• Upside Potential and Compounding Returns VCs aim for 2-3x net multiples, but top-quartile funds deliver 2.5x or more. Emerging managers outperform established ones, hitting top-quartile performance 34% of the time (vs. 25% overall) and beating returns by 250 basis points on average. Plus, carry (typically 20%) on exits can turn a $10M fund into life-changing wealth—think 10x returns on hits amid a market with 58,000+ VC-backed companies averaging 7 years to maturity.
• Network and Influence Boost Funds open doors to elite founders, LPs, and co-investors. As a fund manager, you’re not just investing—you’re tapping the pulse of the market. Data shows VC involvement accelerates startup growth, with funded firms 14% more likely to survive and create jobs. For business owners like yourself, it’s a way to leverage your ops experience into broader impact, like spotting SaaS. This is a great way to leverage your expertise and business to create win-win investment opportunities.
• Diversification and Portfolio Power A fund spreads risk across 20-30 bets, boosting unicorn odds (portfolios with 20+ investments see 2-3x better chances). In 2025’s rebounding market (Q3 deal counts up 10% QoQ), this means exposure to trends like AI. Although, I think there are more areas ripe for investment other than AI….
• New Tech and Flexibility Build something enduring—many funds evolve into a revolving door for operators to leverage the cutting edge of technology for their business. Just simply joining the VC space puts you and your business at the forefront of technology giving you an edge above your sleepy competitors not looking to startups to help innovate. Fundraising’s tough (median close: 15 months), but for execs with track records, it’s achievable with your network/credibility

In short, if you’ve got the grit and some non-opex cash on your balance sheet (like bootstrapping a biz), a fund amplifies your edge. Emerging managers are thriving in small funds—40% of 2025 vintages are $1-10M, perfect for starters.

A Practical Step-by-Step Guide to Starting Your VC Fund

Alright, theory’s great, but let’s get tactical. This is compiled from my experience and a few guides from Carta, Founder Institute, and NFX, here’s how to launch in 2025-2026. Expect 12-18 months total (or less with consulting/dedicated resources). I’ve broken it into phases with timelines, costs, and pro tips. This assumes you’re an emerging manager / executive with some track record (e.g., angels or exits).

Phase 1: Prep and Planning (Months 1-3, Cost: $5K-20K)

1. Define Your Investment Thesis Nail what you invest in—e.g., Drone Defense, Nuclear Fusion, early-stage AI in underserved markets, etc. Or – if you own a business, align the funds thesis with your company’s core values and strategy roadmap. Tip: Make it unique, like my focus on operator-led SaaS. Draft a 10-page deck outlining strategy, target returns (aim 3x net), and differentiators.
2. Assess Your Track Record Build proof—past investments, advisory/board roles, current company growth.
3. Choose Fund Structure and Size Go for a limited partnership (LP) for tax perks. Target $5-25M for Fund I (67% of 2025 funds are here). Fees: 2% management, 20% carry. Consult a lawyer for docs—cost $10K+.

Phase 2: Team and Network Building (Months 4-6, Cost: $10K-50K)

4. Assemble Your Team Solo or small? Add a partner for sourcing. Hire via networks; emerging funds thrive on operator experience (67% rely on personal nets). Budget for part-time ops help.
5. Expand Your Network Attend events (e.g., NVCA conferences), join communities like VC Lab. Source LPs: Family offices (easiest for starters), HNIs, executive networks, current personal network. 
6. Legal and Compliance Setup Form the entity (Delaware LLC common). If >$150M AUM, SEC register; else, exempt adviser. Get EIN, open bank accounts. Use Carta for admin—cost $5K/year. Pro tip: Address pitfalls like oversized funds; start small to avoid dilution.

Phase 3: Fundraising (Months 7-12, Cost: $20K-100K)

7. Craft Your Pitch Deck and Materials 15-20 slides: Thesis, track record, terms. Highlight edge—e.g., your biz ops for better diligence.
8. Secure Commitments Pitch 200+ LPs; aim for 10-20% close rate. First close at 25-50% of target to start investing. In 2025, emerging raises are tough but up in small segments. Use warm intros; track with CRM.
9. Close the Fund Finalize LP agreements, wire funds. Celebrate—but now get to work!

Phase 4: Operations and Deployment (Months 13+, Ongoing Cost: 2% of AUM)

10. Set Up Operations Platform like Carta for cap tables, due diligence tools. Build a pipeline: Demo days, investor networks, Pitchbook, and other sources.
11. Source and Invest Target 20-30 deals; use my diligence checklist (from my early posts). Diversify; only 10-15% yield 10x.
12. Manage and Exit Support portfolio, plan follow-ons. Track IRR (aim 25-30%). Reinvest wins for Fund II.

This playbook’s worked for many emerging managers—but you’ll need to tailor it. Especially if you are going to be investing off your company’s balance sheet. I’d be happy to help direct that effort. In most cases it is cheaper, faster, and more capital efficient!

I’d love to know what your thoughts are on the journey of VC investing. If you have a fund (or dream of having one) – What’s your thesis? My top 3 personal areas I’m looking to invest in this new year are Defense Tech, Future of Consumer/Human Care, and Adv. Manufacturing.

Reply to this post or hit me up on LinkedIn!

Thank you for your support!

Dawson J. Racek