Paul Singh

For example, if you're working on a web company and you're super early stage, and let's just say you only want to raise $250,000, generally speaking, you probably don't want to go to a fund that is investing out of a billion-dollar fund.

And vice versa, right?

So it's like, if you want to raise $5 million, you don't really want to go to a $50 million fund.

Ah, right.

Okay, so I understand what you're asking now.

So the thing is that when you raise a fund, generally speaking, you're not going to hold all that money in the account.

So to step back, when you raise a fund, typically that fund is an 8- to 10-year vehicle.

It could be a little longer.

It could be a little bit shorter.

Um, and generally speaking, if somebody says to you, Hey, I'm going to give you 50 million bucks, you don't just take that entire pool of money and let it sit in your bank account.

And the reason is, um, there's better ways for that other, for that LP, that limited partner to invest that money until you need it.

Right.

So the way to think about it is, is that like, um,

The way to think about it is that, like, let's say you've got $50 in your bank account versus $50 in your pocket, and you don't want to spend either for 30 days.

Generally speaking, it's better to keep that $50 in a savings account or, you know, a small money market account in your bank because you're going to get a little bit of interest on that, right?

Got it.

So when you raise a fund, typically what happens is you call anywhere from 20% to 40% of that money up front.

It could be a little less, a little more, depending on what you want.

And then you call the rest of it as you need it over the lifetime of that fund.

So generally speaking, though, that shouldn't impact the founder too much.