Fundraising

New VC fund managers do not know that these things they are doing are completely ILLEGAL… ❌ There are very strict rules around fundraising. Yet many new GPs copy what they see others doing — even when it’s illegal. The risk? Trouble today, or 5–10 years down the line when regulators or LPs look closer. Sophisticated LPs know the legal lines — and crossing them exposes both liability and inexperience. Here are the 3 most common fundraising violations (and how to avoid them): 1️⃣ PERFORMANCE-BASED FUNDRAISING COMPENSATION 👩🏾⚖️ Many “Vendors” often say: - “I’ll be a venture partner — give me carry for LPs I bring.” - “We’ll raise for you — just pay a % of capital committed.” 🚫 Illegal without a broker-dealer license ($50K–$150K+ + ongoing compliance). Even employee bonuses tied to fundraising can trigger violations. ✅ Legal way: Pay fixed fees or salaries unrelated to fundraising. Compensate with cash, equity or carry — but not tied to capital raised. 👉 Reality check: As a new manager, it’s extremely unlikely that anyone else can fundraise for you without a track record. You’ll almost always need to do the hard work yourself. 2️⃣ GENERAL SOLICITATION 👨🏻⚖️ New managers assume LPs will roll in if they “go public.” Tactics include: • LinkedIn posts about fundraising • Cold DMs to people • Podcasts/webinars about your fund • “Contact us to invest” buttons on websites 🚫 All illegal — unless you’ve structured under narrow exemptions. Even cold outreach counts as solicitation. ✅ Legal way: You can only pitch people you have pre-existing relationships with who are accredited investors. Network authentically, vuild relationships, then pitch one-on-one. 👉 Reality check: Public fundraising isn’t just illegal — it looks cheap. LPs won’t trust someone blasting cold posts with no track record. VC is trust-based. Public asks scream inexperience. 3️⃣ RAISING FROM EU LPS WITHOUT COMPLIANCE 🧑🏿⚖️ Many assume: • “If a European LP wants in, I can accept the money.” • “Everyone else does it — must be fine.” 🚫 Wrong. The EU regulates under AIFMD (Alternative Investment Fund Managers Directive) and MiFID II (Markets in Financial Instruments Directive). Even one EU LP can trigger filings. Regulators act quickly. ✅ Legal way: Work with EU securities counsel. File required notifications in each jurisdiction before accepting European LPs. 👉 Reality check: European LPs expect compliance. Skip it, and you lose credibility. Worse — a violation can come back years later and jeopardize your fund. Breaking the rules — even by accident — is the fastest way to undermine your credibility. And “everyone else does it” is not a defense. The managers who win are the ones who know the rules, build real relationships, and raise the right way. ⚖️ Know the rules. Follow them. Your fund' future depends on it.

This Danish foundation gives away $1.3 billion annually – and their secret isn't efficiency ratios, it's something far more radical: They implement nothing. Behind this Danish foundation's rapid rise is Ozempic – the blockbuster diabetes and weight-loss drug that's generated unprecedented profits for Novo Nordisk. The Novo Nordisk Foundation, which owns about a quarter of the pharmaceutical giant, has become one of the world's wealthiest charitable foundations with assets around $167 billion. Yet rather than hiring armies of staff like other major philanthropies, they've gone the opposite direction. In a recent interview, their Chief Scientific Officer for Health Flemming Konradsen revealed their secret to me: They don't implement – they only work through partners. Zero programs. Zero direct service delivery. The model: ➡️ Find what already works  ➡️ Partner with governments who own the strategy ➡️ Create sustainable markets, not dependency  ➡️ Stay for 15+ years, not 3-year cycles Example: Their school feeding programs create permanent markets for local farmers while training health workers and scaling AI solutions across continents. The hard part? Saying no to putting your name on things. Letting partners get the credit. Trusting that influence matters more than control. For development professionals: This approach creates new opportunities. These ultra-efficient funders skip the usual suspects and source partners who can be trusted with strategy, not just execution. They're looking for implementers who think like owners. If you can demonstrate government relationships, long-term thinking, and the ability to build sustainable systems (not just deliver projects), you become invaluable to this new breed of funders. What could your organization accomplish if it stopped trying to do everything itself? Disclaimer: I’ve edited this post as it’s been flagged that Novo Nordisk Foundation has 250 employees. #Philanthropy #Partnership #Foundation 📷 Novo Nordisk Foundation

America needs 10,000 more small developers. But $100K+ pursuit costs keep most people out. Here are the 4 ways to fund the chase: Most developers quit before their first deal closes. It has nothing to do with talent. They think the hardest part is finding good properties. It's not. It's funding the chase. Let me show you the $100K+ barrier that kills careers before they start. I was talking to a sharp developer last week. Great eye for deals. Strong construction background. He'd been "getting ready" to start developing for 18 months. "I just need to find the right property first," he said. That's backwards. Here's what actually happens: You find a property. Then you spend $100K+ before you even know if it works. The breakdown: • Surveys and title: $5K-$20K • Legal fees: $10K minimum • Environmental studies: $3K-$50K • Site planning: $10K-$100K • Permitting: $500 to millions (depending on complexity) Most developers run out of money before they run out of deals. The successful ones solve this first. Here are the 4 ways to fund pursuit costs: 1. Platform Investors: They back your operating company, not individual deals. Best option if you can get it. 2. Predevelopment Loans: 12-18% interest, personal guarantees required. Expensive but available. 3. Seller Financing: Motivated sellers sometimes help with pursuit costs. Rare but powerful. 4. Your Own Pocket: Still the most common. Also the biggest barrier to entry. The reality: America needs more small developers. But $100K+ risk capital keeps most people out. The solution isn't finding better deals. It's finding better capital. Stop looking for properties. Start looking for partners who understand pursuit costs. P.S. This is exactly what we cover in our Introduction to Real Estate Development course. From pursuit costs to closing day. Details in the comments.

New paper, "Sustainable Investing: Evidence From the Field" (with Tom Gosling and Dirk Jenter). We survey 509 equity portfolio managers, of both traditional and sustainable funds, on whether, why, and how they incorporate firms’ environmental and social performance into investment decisions. 1. Both traditional and sustainable funds rank ES last out of six drivers of long-term value: below strategy, operational performance, governance, culture, and capital structure in that order. Clients interested in financial returns should not overweight a fund's ES credentials above its ability to assess these other factors. 2. This low relative ranking doesn't mean that ES is immaterial in absolute terms. Indeed, 73% of sustainable and even 45% of traditional investors expect ES leaders to deliver positive alpha. Unexpectedly, the most popular reason is that ES is a signal for other important value drivers rather than mattering directly. As I wrote in "The End of ESG", ES is "extremely important and nothing special". 3. ES performance influences stock selection, engagement, and voting for 77% of investors (66% traditional, 91% sustainable). Calls to "ban ES" make little sense as many traditional investors voluntarily incorporate it. 4. Only 24% of traditional and 30% of sustainable investors would sacrificing even 1bp of annual return for ES, citing fiduciary duty concerns. Policymakers and the public need to have realistic expectations of the asset management industry's likely ES impact. It will incorporate financially material ES factors, but it won't subsidize ES investments that offer below-market returns. That’s not because fund managers are greenwashing, but because they are fund managers. Their fiduciary duty is to their clients, whose goals are often financial. 5. But non-financial goals can be pursued through ES constraints such as fund mandates. 71% (61% traditional, 84% sustainable) report that ES constraints required them to make different investment decisions. These constraints sometimes reduced the very ES impact they aim to achieve, for example by preventing funds from investing in ES laggards whose performance they could have improved. 6. Overall, traditional and sustainable investors are more similar than commonly believed. Sustainable investors recognise fiduciary duty and are unwilling to sacrifice financial returns for ES. Traditional investors view ES as material and face ES constraints (firmwide policies, client wishes) preventing investment in "unsustainable" stocks. While some clients are attracted by sustainability labels, many traditional funds invest sustainably and many sustainable ones don't - and chasing a label can prevent true sustainable investing. Big thanks to the those who filled in the survey, beta-tested it, distributed it, and were interviewed. We hope that by directly involving practitioners, we can increase the relevance of academic research. https://lnkd.in/eGzRzE5t

The Winner Is….?   Direct Lending Private Credit transactions provided to Private Equity Sponsors have a lower default rate and loss rate compared to Non-PE Sponsor deals. In fact, the default rate/loss rate is ~50% lower for Sponsor-led deals vs. Non-Sponsor deals, as show in the data below. Capital Allocators investing in Direct Lending know this to be true given a multitude of factors:   1. Sponsor Oversight and Support: Private Equity Sponsors typically take an active role in managing their portfolio companies. They provide strategic guidance, operational improvements, and even financial support during challenging times. Their hands-on approach helps stabilize companies during periods of stress, reducing the likelihood of default. 2. Alignment of Interests: PE sponsors have significant equity stakes in the companies they invest in, creating a strong incentive to ensure the company's success. They are more likely to inject additional capital or restructure operations to avoid default, thereby protecting their investment. 3. Stronger Due Diligence: PE sponsors generally perform extensive due diligence before making an investment. This thorough vetting process results in higher-quality borrowers, as only companies with robust business models and growth potential are likely to receive sponsor backing. 4. Access to Resources: PE-backed companies often have better access to resources such as management expertise, operational enhancements, and additional funding. This can help them weather economic downturns or market challenges more effectively than non-sponsored companies. 5. Proactive Governance: PE sponsors usually enforce stricter governance and financial controls in the companies they back. This oversight can help ensure better financial discipline and faster response to problems, thus reducing the likelihood of default. 6. Reputational Risk for Sponsors: Private equity firms are highly concerned with maintaining their reputation in the marketplace. A default in one of their portfolio companies can tarnish their standing with investors and lenders, which can affect future deal-making. As a result, they are more likely to intervene to prevent defaults.   Middle Market lenders have "edge,” wider spreads with strong covenant protection. Private Credit wins over Broadly Syndicated Loans and High Yield Bonds (lower default rates, higher returns) year after year.

“IIT / IIM / BITS asks alumni for help with placements, in tough job market” It’s funny but not surprising that our media would sensationalize outreach from leading academic institutions in India, to their alumni community, for help with their campus placements for jobs for their students. As Prof. V Ramgopal Rao said in a tweet: “It should be a very normal thing for institutions such as BITS and IITs to reach out to alumni for placements. If an institution isn't tapping their eminent #alumni network for #placements, they are doing something wrong. Please treat such emails from BITS Pilani to its alumni as a very normal thing henceforth.” As the saying goes though, you should never waste a good crisis, and having seen placements at the IIMs (India’s elite business schools) for 21 years, I think there are three important shifts / changes that we need to see with institutions, alumni and students: 1. Academic institutions need to professionalize their placement process and invest in relationship management with their alumni and recruiters Campus placements at the IITs and IIMs is often student managed, which means that as students change every year, there is no relationship built with recruiters and alumni and it becomes transactional. Placements needs to be led by full time staff - with the same profile as relationship managers at banks - who manage the relationships with recruiters and alumni who are recruiters, and who also broaden the relationship beyond placements to MDPs, research, etc. Students can still be involved in a supporting role, to the full time staff. Indian School of Business has done this well and so do all international institutes in the US. 2. Students need to learn how to find their own jobs and build their networks and personal brands Students at the IITs and IIMs are spoon fed jobs. This unwittingly handicaps them for the real world because they are not taught how to find jobs themselves. They are not taught how to build relationships and a network. They are not taught how to build a personal brand on LinkedIn and cut through the clutter of the thousands of students in their cohort. A careers and placement office staffed with professionals can help train students in these important skills. The top institutes abroad train their students how to network and train them on their elevator pitch and much more. 3. Alumni need to give back and Alumni Associations can help be a bridge with their alma maters Alumni can play a critical role in connecting their companies with their alma maters and coaching current students. Often they want to help, but don’t know how. Alumni Associations can help here in collaborating with the alumni office / alumni committee on campus as well as with the careers office / placement committee, to create channels between alumni at recruiters and the campuses. IIM Kozhikode Alumni Association and IIM Kozhikode have done well on this front. What do you think needs to change?

These days everyone wants to be a #SuperApp but only a handful have managed to succeed. Those who have share one common denominator: monetization. Let’s see how it can be done. Here is my summary of the most successful strategies: 1.  An ecosystem play – as opposed to providing mere access to an array of different services – with seamless, integrated, end-to-end experience across all aspects of modern life. 2.  #Payments as the undisputed underlying layer that acts as a connecting base for the multitude of offerings on the platform. 3.  A wide range of integrated payment methods catering for different use cases and target audiences (P2P, BNPL, money transfer, instant payments, online payments, QR codes, etc). 4.  Low customer acquisition costs as a direct result of the platform play and then up-selling and cross-selling of high-margin financial offerings (i.e. lending, investment, insurance, e-commerce, digital #banking) and merchant added-value services (i.e. merchant financing, collection technology platform). 5.  #Data as the predominant tool for driving high engagement with tailor-made offerings that transformed how, when and in which context services are offered. 6.  A two-sided consumer and merchant ecosystem with the platform acting as the bridge that not only connects the two sides but fuels growth from one to the other in an open, two-way dynamic relationship. In such a set-up platform engagement (consumer side) enables merchant growth creating a self-reinforcing loop based on high frequency and high repeat rates that lead to consumer stickiness and retention. 7. Software and cloud services to a range of B2B partners (enterprises, telecoms, digital platforms, fintechs), which act not only as a platform amplifier but also as multiplier of customer engagement that unlocks additional customer data points and insights. 8.  A subscription-led ecosystem for merchants: the platform becomes the enabling layer for partners, merchants and other tech providers to accept payments through a wide variety of instruments, including subscription-based models that create permanent revenue and stickiness. 9.  Help merchants drive revenue growth via marketing channels: merchants sell discount deals, gift vouchers and other digital goods like tickets to platform users. 10.  Leverage a network of banks and other FS providers to expand distribution channels. 11.  First-mover integration advantage with the local ecosystem. Paytm was, for example, the first app to launch UPI Lite in India and has subsequently enabled wallet interoperability that allowed full KYC Paytm Wallets to be universally acceptable on all UPI QR codes and online merchants. Opinions: my own, Graphic source: Paytm quarterly reports Subscribe here to my newsletter: https://lnkd.in/dkqhnxdg

Make your budget process smoother! Use my checklist based on my 15 years of experience. 🔗 Download it here: https://lnkd.in/edvf5exs Here is what is inside: 1️⃣ Preparation & Planning 🔲 Understand management's expectations concerning growth, strategy & profitability 🔲 Set clear financial goals and differentiate between short and long-term objectives 🔲 Establish a structured approach for managing the budget process (deadlines, owners) 🔲 Ensure that budgeting activities align with the organization’s overarching goals and priorities Tip: you can use ChatGPT to draft your budget instructions or budget memo. If you want to learn how to use ChatGPT for Finance, you can learn it here: https://lnkd.in/e8RGdYsK 2️⃣ Sales Planning 🔲 Choose an appropriate method for sales planning 🔲 Detail your budget sufficiently for effective analysis 🔲 Consider external factors like market trends, economic conditions impacting the business 🔲 Ensure accurate phasing of the sales plan 🔲 Conduct 'what-if' analysis to understand impacts on resources and profitability 3️⃣ Operational & Resource Planning 🔲 Plan for production, delivery, and workload 🔲 Account for direct headcounts & determine capacity 🔲 Determine material needs and plan for necessary investments 🔲 Collaborate with cross-functional teams to develop a comprehensive operational plan 4️⃣ Costing & Overhead Planning 🔲 Compute standard costs: direct labor, material costs, and manufacturing overhead allocation 🔲 Budget for individual departments and allocate overhead costs accordingly 5️⃣ Financial Statements & Reporting 🔲 Translate the budget into key financial statements: Income Statement, Balance Sheet, & Cash Flow 🔲 Establish a structured reporting process to communicate budget-related information to stakeholders 🔲 Create a visual budget performance dashboard to quickly assess the financial performance 6️⃣ Monitoring & Analysis 🔲 Regularly monitor and analyze budget variances to identify deviations 🔲 Perform sensitivity analysis to understand potential impacts on the budget 🔲 Leverage financial data analysis tools to identify trends, patterns, and opportunities for improvement 7️⃣ Communication & Collaboration 🔲 Foster open communication and shared financial goals in relationships, both internally and externally 🔲 Engage with stakeholders from different departments to gather valuable insights 🔲 Develop and communicate clear budgeting policies and procedures 8️⃣ Final Review & Implementation 🔲 Review the budget for any inconsistencies or errors 🔲 Communicate the finalized budget to all relevant departments and ensure its implementation 👉 Did I miss anything? Get this checklist to organize your budget process. Link below in comments.

People sometimes see Acumen raising large amounts of commercial capital and assume we no longer need philanthropy. No sooner had we announced $250M for our Hardest-to-Reach fund — to bring off-grid light and electricity to 70 million people across 17 of Africa’s most challenging markets — than some concluded Acumen must be set. In fact, the opposite is true. First, let me acknowledge how tough this fundraising environment is. I couldn’t be prouder of the team and partners who made our Hardest-to-Reach announcement possible after 2.5 years of relentless effort. And yet it’s worth underscoring: none of this would have been possible without philanthropy. Philanthropy is the first mover. It allows us to place early bets in fragile markets like Malawi and Benin, cover the development costs needed to structure and raise investment across the capital spectrum and provide the technical assistance that builds capacity. To put a finer point on it: of the nearly $250M raised for Hardest-to-Reach, more than $80M is philanthropic. That risk-taking anchor made it possible to prove new models — and ultimately unlock institutional investment. During Climate Week last month, I met philanthropists who see this as the time to pivot from grantmaking toward impact investing. While I understand the instinct, I want to offer a reframing: it’s not either/or. If you want your capital to have lasting impact, there may be no better use than catalytic philanthropy — especially when deployed through blended finance models like Hardest-to-Reach. Philanthropy cannot see itself at the margins. It is catalytic capital — risk-taking, patient, and unabashedly impact-first — creating the conditions for commercial capital to follow. And it's more important now than ever as traditional aid shrinks and many governments shift from grants to investment approaches. At Acumen, philanthropy from donors at all levels remains our bedrock. It enables us to reach the hardest-to-reach, build inclusive markets where none exist, and keep social impact at the center of everything we do. And because solving problems of poverty is Acumen’s mission, raising philanthropic capital will remain essential to our work.

What's the secret to securing funding from foundations? This question, in various forms, has been asked of me a lot since I my post about the fundraising component of Mongabay's strategic plan (https://bit.ly/3NVeRd2) a few days ago. To be clear, I don't claim to be an expert in this field. However, I can certainly share insights from my decade-long experience of elevating Mongabay's foundation support from zero to about $5M last year. The right messaging When I initially began seeking funding from foundations, I received no response about 90% of the time. When I did receive a response, it was almost invariably, "no thanks". Despite my belief that my initial outreach was targeted (e.g. foundations that supported areas aligning with Mongabay’s work like journalism and conservation), I soon recognized a need to revise my targeting and messaging. Program officers at philanthropic foundations are usually in the business of giving away money effectively. That last word is important: You might be surprised how many times I’ve been told that it’s hard to give away money effectively. In that initial outreach, I put too much emphasis on what Mongabay is doing rather than how its work could help program officers better accomplish their foundation’s objectives. So I tailored my message to explain the value proposition of Mongabay’s independent journalism. This was a nuanced argument because to many, journalism can feel like a peripheral intervention when compared with establishing a protected area, for example. Know your strengths My job was to explain how objective journalism – distinct from PR and communications – could act as a catalyst in several ways, including informing key decision makers, increasing awareness, and functioning as a due diligence tool. Understand your audience Adapting my message and ensuring it reached the right person required research to understand a foundation’s strategy and objectives, as well as the individuals responsible for granting funds to organizations. Program officers are typically inundated with requests – keeping your message short and clear may help it break through. Build relationships In the fundraising world, it's often said that "People give to people, not causes." This might be less true with institutional foundations, but relationship-building is still critical. Seek intros My success rates with cold outreach have been low – the most common response to my foundation inquiries remains a lack of response. Don't hesitate to ask current donors for appropriate introductions to other funders. Measure impact One reason, I believe, for Mongabay's high renewal rate from foundations is our commitment to gathering evidence of the impact of our work. Providing an example of impact can be a great way to follow up with a donor. _ While everything I’ve shared here is very basic, I confess I've overlooked these points myself at times. Foundations aren't easy, but they can provide a strong base of support.