Fund Structure
Successor Fund
A new fund raised by the same GP after their previous fund, typically with a similar strategy but larger size.
A successor fund is the next fund in a GP's series (e.g., Fund II following Fund I). Raising a successor fund is a critical milestone for emerging managers, as it validates their ability to attract repeat and new LP capital. Successor funds are typically 2-3x the size of the previous fund if performance is strong.
In Practice
After deploying Fund I ($50M) with strong early markups, a GP raises Fund II ($150M) from returning LPs plus new institutional investors attracted by the track record.
Why It Matters
The ability to raise successor funds is the fundamental business model of VC — management fees from larger successor funds provide the economics that sustain a firm long-term.
Related Concepts
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