How I Invest with David Weisburd
E132: How Nichole Wischoff Raised a $50M Fund in 5 Months
Fri, 24 Jan 2025
In this episode of How I Invest, I dive into a conversation with Nichole Wischoff, Founder and Managing Partner at Wischoff Ventures, to explore her remarkable journey of raising a $50 million fund during one of the toughest markets of 2024. Nichole shares her insights on fundraising strategies, the power of media in deal sourcing, and building a personal brand. She also discusses her unique approach to fostering relationships in venture capital and why community and authenticity are key drivers of success in this space. This episode is packed with actionable takeaways for emerging fund managers and anyone navigating the world of VC.
Chapter 1: How did Nichole Wischoff raise a $50 million fund in just 5 months?
In terms of strategy, going out in March, telling LPs, I guess I was sort of bluffing, but I believed it, that I would have a first close and ideally on 50% of the fund around the May timeline and was aiming for a final close in August. And crazy enough, maybe I manifested it, but it worked out. So Sendana came in, anchored the fund, and it was off to the races in five months end to end.
The other piece, and then I'll pause, is just having a good product, right? So there was some data that came out that was just showing like median IRR and metrics for funds from the 2021 vintage and 22. both of which are my fund one and two. And we're top decile, right? And so, and we had some early markups in fund two. So the product is also great, right?
And our distribution has really taken off. So I think there, obviously you have to have something that people want to invest in. One part is just the strategy around like how to raise because it's frustrating and time consuming. And the other is, do you actually have something people want, which was the real test? And it turns out that we did.
When you say you have a distribution advantage, what do you mean by that?
Chapter 2: What strategies did Nichole use to build relationships in venture capital?
Chapter 3: How does media influence deal sourcing?
Double click on that. How does media help you win deals?
Ultimately, I can get on the phone with anyone. And I really saw that that took about two years. And then I want to say about a year ago now, early 2024. I remember there were founders that had term sheets from super notable funds. I typically try not to chase those deals, but I really liked the business they were building. I love their background.
So I remember sending a note on LinkedIn and just saying, you know, like, hey, team would love to meet. I know I'm pretty late in the process, but let me know if you have time. Something that at least I do with other managers, I'm not sure how common this is outside of my little bubble, but we all usually will share a spreadsheet and say, hey, here's everyone I've met with.
Here's everyone that has converted and are LPs. Here's everyone that you might actually be a great fit for because they're looking for A, B, and C. And so a lot of us try to just share who are the LPs that are active. And frankly, who are the ones that waste your time? There are folks that are just not active that are out there. They want to talk. And then they maybe want a lot of things from you.
They want to direct invest in some of your companies. And they, you know, just there's some bad actors.
Nicole, you pulled off a $50 million fundraise in one of the toughest markets the summer of 2024. How did you accomplish this?
In terms of strategy, going out in March, telling LPs, I guess I was sort of bluffing, but I believed it, that I would have a first close and ideally on 50% of the fund around the May timeline and was aiming for a final close in August. And crazy enough, maybe I manifested it, but it worked out. So Sendana came in, anchored the fund, and it was off to the races in five months end to end.
The other piece, and then I'll pause, is just having a good product, right? So there was some data that came out that was just showing like median IRR and metrics for funds from the 2021 vintage and 22. both of which are my fund one and two. And we're top decile, right? And so, and we had some early markups in fund two. So the product is also great, right?
And our distribution has really taken off. So I think there, obviously you have to have something that people want to invest in. One part is just the strategy around like how to raise because it's frustrating and time consuming. And the other is, do you actually have something people want, which was the real test? And it turns out that we did.
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Chapter 4: What role did existing relationships play in securing funding?
Chapter 5: What challenges did Nichole face while fundraising?
And so within the first three weeks of the raise in March, I had several calls a day, like seven to nine, I think was my max, some 45 minutes, some an hour. And I wanted to get everyone in the data room at the same time. I wanted them to know that that was the goal of the May 1st close, the final close in August. And so that was what I stuck to.
Again, no idea if that was going to work out, but I put my head down and like that was what the expectation was. In reality, it took to get to 50 percent raised and closed that two and a half to three months. And then from there, that remaining 50 percent of the funds of 25 million took 30 days. I can speak more to that.
And then the final month of that, so let's say we were four months in, was really just legal back and forth. So red lines on the LPA, getting docs signed is honestly tons of legwork and actually really expensive from a legal perspective. But that took up about like a month of it. Of the 108 calls, 28 committed. So we converted about 26%. I don't have benchmarks for other funds.
I don't know if that's great. I don't know if it's terrible. It worked for us. It's a good number. We got it done. An interesting stat, 38.5 million of the 50 million are from six LPs. So we really have like four or five, $5 million checks, and then one $15 million check.
And then the rest are 2 million, 1 million, and then a very, very few existing LPs that really wanted to come back in, but I've outgrown that wrote 500K checks.
How did you get people to commit to the first close so quickly? In other words, what was your forcing mechanism for getting the first 50% in?
So that's a really good question. All existing folks... So there were a few folks, specifically single family offices, that I had really gotten to know that missed fund two that said, Nicole, no matter what, when you start raising, we want in for a million. And so that was three checks that came in.
Was this after your fund two was closed? Was it at the tail end they couldn't get their diligence? Why did they miss fund two?
It was closed. They saw, I think, some press and they're like, we really want to meet Nicole. And they're like, is there any chance you can increase the $20 million fund size and take more capital? And the answer was no. And so we kept in touch for two years. And so whenever I kicked it off, they were very quick to say, send the docs, like we're in, we stand by wanting to commit a million.
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