For many emerging managers, institutional capital isn’t just a bigger check—it’s a chance to build an enduring firm rather than a one-off fund. But making the leap from high-net-worth individuals to institutional investors requires more than strong returns. It demands operational discipline, long-term strategic thinking, and a fundamentally different approach to building trust with allocators.
I recently sat down with Ross Robinson of Velocity Fund and Marell Evans of Exceptional Capital, two fund managers who shared how they have successfully navigated this challenge. Ross, who spun Velocity Fund out of the University of Waterloo's incubator program, brings a unique perspective on leveraging institutional relationships. Marell, who raised a $50 million first fund at Exceptional Capital after his experience at Softbank, offers insights on building credibility with top-tier allocators.
Responses have been edited for clarity and length. The full conversation can be found here.
What drove you to pursue institutional investors for your capital base?
Marell: I think the first thing is not letting my ambition be marginalized. A lot of emerging managers say they're not ready for institutional capital and want to start with family and friends. But to stay in business and build an enduring firm, you have to institutionalize sooner rather than later. Before I started the firm, I wanted to have a 30 to 50-year vision of how I could impact the world, and that resonated really well with institutional folks.
Ross: That’s similar to my experience. Many emerging managers write themselves off from the category entirely. But institutional capital is to us as VCs are to startups—it takes more time, and you need to be more conscious about picking the right people to pursue. There's often a strategic component that's reciprocal. If it's good for them, it's probably good for you too.
What weren't you fully prepared for when approaching institutional investors?
Ross: Truthfully, I wasn't prepared for any of it. Along the way, I quickly learned that the most important skills are relationship building—developing trust with everyone, not just decision makers—and being able to think about how the investment decisions you're making today will shape the fund policies and structures you'll need for future conversations with institutional LPs.
Marell: I didn’t fully appreciate how long-term endowments and institutional investors think. In those 30, 60, 90, 120+ days of building relationships, it seems like a long time. But they're making a bet on you for multiple years and hopefully decades. Understanding the trust it takes to win over institutional thinkers, especially with the lack of liquidity events, is crucial.
Before an institutional LP says 'yes,' what does the process typically look like from first meeting to commitment?
Marell: First, you need to get crystal clear on your investment thesis and what you're offering. You need the same consistent narrative every time—no winging it. One of our best LPs is Screendoor, and they gave us tons of feedback that helped us refine our pitch and learn to handle constructive criticism better.
Here's the hard part: you need to develop short-term memory. You might get 20 rejections, but you can't let that last "no" affect your confidence in the next meeting. Each conversation is fresh.
Ross: I underestimated the relationship component of institutional capital. The financial and returns component is table stakes—you have to be good to get in the door, but you win because of the relationship you built. It's not really about the numbers once you meet the baseline. We've had conversations where an offhand comment about caring about health tech turned out to be their most important investment criteria—you have to train your brain to recognize what's signal versus noise.
What sets top-tier GPs apart in the way they build and maintain institutional LP relationships?
Ross: Think of it like pushing a boulder uphill. You're doing most of the work—sending updates, following up, staying in touch—until you finally get their attention and you start moving through their formal evaluation process. But here's the thing: their formal process might only take a few weeks, while building the relationship beforehand can take months or even years.
It’s important to think about how you can add value along the way—maybe introducing them to other fund managers they want to meet, or sharing deal flow insights. It's not just about pitching yourself.
Marell: I agree that it's usually you pushing the process forward. They have many people they're talking to. You need to figure out how to be persistent without being over-persistent. Every time you have an investor update, see a new founder, or close a new deal, send a concise, compelling update. It’s a fine balance between being proactive without being overwhelming.
What is key to building credibility with institutional investors?
Marell: First, do what you say you're going to do. If you say you're going to get 5-7% ownership and lead deals, showcase that. Don't let the popularity contest of podcasts and social media suck you in. Stay thoughtful about what you produce and stick to your identity. If you were first a web3 fund, then became an AI fund, are you credible or just jumping to every trend?
A very easy way to skip the credibility line is getting someone in their network to let them know you're credible. I don't need to tell you how smart I am—let someone you already invested in tell you how smart I am.
Ross: You're building credibility as you fly, especially if you're in your first 100 deals. Over time, as you have more conversations, you'll speak more naturally to how LPs see the world. That helps you become more credible in your 100th conversation versus your first. And again, think about how you can provide value—not just talk—through connections and other ways.
What is needed for fund ops and team building with institutional investors?
Ross: We definitely have to divide responsibilities—you don't have much choice. I'm the back office nerd of the fund, handling processes and institutional LP requests. We share core investment decisions, but I focus on building operational processes as we go.
Marell: To Ross’ point, you need to understand your zone of genius—what you're competent at, what you're incompetent at, and what you do very well. Then stack with vendors or humans to fill in deficiencies. If you're pursuing institutional capital, you're not building a fund, you're building a firm. They're investing in you for multiple funds.
For example, making diligence easier was crucial for us because the moment your data room is sloppy, you're done, because there are 15-20 other people better than you who took the opportunity seriously. To ensure we were prepared, we hired a fractional CFO to handle proper diligence questionnaires so meticulously that it was copy-and-paste when we needed to do it again.
Post-close, what's your approach to maintaining relationships?
Ross: Generally, we do quarterly updates that cover a combination of data and stories. For this fund, we're focusing more on personal connections. I recently invited all of our LPs and portfolio founders to my house to get to know each other in a casual environment. We want to treat these relationships more personally to build trust and goodwill.
Marell: I strongly believe that you need to build a brand in this new age. If a GP says brand doesn't matter, they're probably overconfident in their ability to pick winners. In reality, staying top of mind with the most intellectually curious founders is crucial. We have a program called "Exceptional 100" where we proactively pick the top 100 people we think could be future founders and try to brand that—before they even think they can start a business. We're very strategic about where we show up and how we build our NPS score across the community.
Conclusion
Institutional capital isn’t just for large venture firms. ILPs are looking to place checks across the best venture investors, across the AUM spectrum. However, capturing these investors does require a fundamentally different approach than many emerging managers are used to. It isn't just about proving returns; it's about building relationships, demonstrating operational excellence, and playing the long game.
As Ross and Marell's experiences show, success requires patience, persistence, and the discipline to say no when terms don’t align with your vision. Those who combine this mindset with operational rigor and meaningful relationship building position themselves to raise Fund I and build an enduring firm for Fund IV+.
For additional insights or to share the conversation with others, you can find the full conversation with Ross and Marell, including a live Q&A from the audience, below.
Ready to take your fund to the next level with institutional backing? Learn more about how AngelList partners with institutional investors here or connect with an AngelList team member today.
Disclaimer
The views and opinions expressed in this post are those of the speakers and may not reflect the views of AngelList or any of its affiliates. This post is not intended to be a recommendation for any investment or other advice of any kind. Past performance is not indicative of future results. An investment in venture funds involves a high degree of risk and is suitable only for sophisticated and qualified accredited investors.
