First fund close: pre-close, close, and first capital call

Raising a first fund has three budgets, not one. Get them confused and the math breaks before you close.

Management company burn is what the GPs spend before first close, paid personally or from the management company. Organizational expenses are one-time fund setup costs, charged to the fund at first close. The first capital call is the amount LPs wire in at close, covering org expenses, initial fees, and any investments ready to go.

Here's how each lives in the Venture Capital Model.

Management company burn (pre-close)

The gap no one warns you about. Six to twelve months of running a management company with zero revenue.

The management company pays for fund formation legal (LPA, subs docs, side letters), typically $50k-$150k for a first-time fund. Fundraising costs like decks, website, and travel add $10k-$50k. Partner draws cover whatever the GPs need to live on while raising. Setup costs for accounting, banking, and insurance run $5k-$20k.

Total pre-close cash need is roughly $100k-$250k of personal capital or bridge debt.

Model this on the Management Company sheet. It's a P&L for the management entity, not the fund: fee revenue (zero until first close), operating expenses, GP commit obligations, carry income (years away). Walk it forward quarter by quarter. If the cash balance goes negative, you know what to fix (fund size, fee rate, or personal runway) before the roadshow.

Organizational expenses (charged at close)

Once you close, setup costs get charged to the fund as "organizational expenses." One-time, capped in the LPA, typically the lesser of a fixed dollar amount (e.g., $150k) or a small % of committed capital.

In the VC Model: Get Started D11 is Organizational Expenses. Default $100k in the flagship, $150k in the quarterly model. Set this to your LPA cap.

What fits here: closing legal, fund admin setup (Carta, AngelList, Allocations, or a traditional admin), initial tax and regulatory filings, fund bank accounts.

The model charges the full org amount in the first quarter of fund operations. TODO: confirm. If your LPA allows amortization across the first years, that's an edit to the shipped formula, which treats it as a one-time Q1 hit.

Management fees and operational expenses (ongoing)

Two separate inputs, both on Get Started. D13 is Management Fees % per year (default 2%), based on committed capital by default; see Management Company for how to model called-capital or AUM-based fees instead. D12 is Operational Expenses per year (default $75k in the flagship, $100k in the quarterly), the annual operating cost on top of management fees covering fund admin, audit, tax prep, and ongoing legal.

The fee period is D18 (quarters, default 40 = 10 years). Extension period is D20.

On a $25M fund at 2%, that's $500k/year of fee revenue to the management company. Net of $75k/year of fund operational expenses, your management company gets ~$425k/year to cover partner draws, rent, insurance, travel, and marketing.

Run those numbers against your personal burn rate before you size the fund. Many first-time emerging managers raise a fund too small to pay themselves.

The first capital call

At first close, the fund calls enough to cover all of D11 (org expenses), one quarter of D13 × D9 (mgmt fees), one quarter of D12 (ops), plus any immediate investments.

For a $25M fund at defaults: $100k organizational, $125k Q1 management fees (2% × $25M / 4), and ~$19k Q1 ops ($75k / 4). First call total: ~$244k, or about 1% of committed capital.

The Forecast sheet shows this. Inputs from R9-R20 flow into a quarterly call schedule. Q1 is the first call; subsequent quarters layer in ongoing fees, ops, and investment pacing. You don't model each call by hand; Get Started drives all of them.

What to get right before the roadshow

1. Model the management company cash gap. Six to twelve months of burn before fees start. This is the line first-time managers miss.
2. Size the fund so fees pay the bills. Fund size × fee rate ÷ partners ≥ livable draws, after operational expenses.
3. Match org expenses to LPA cap. D11 should equal the cap in your LPA, not a guess.
4. Walk the first four quarters line by line. On the Forecast sheet. First call, first investments, first fees, first ops.

For the full walkthrough of the model, see Venture Capital Model. For the simpler quarterly version with power-law returns instead of graduation modeling, see Venture Capital Model, Quarterly Forecast.