Earlier this year, I gave a talk in Warsaw to a room full of angel investors. The most common question I got afterwards wasn't about our portfolio or our thesis. It was much simpler: "When do I get my money back?"
It's the right question. So let me try to answer it honestly, along with a few other things every current or prospective LP deserves to hear directly.
You are not buying shares. You are joining a partnership
The first mental shift is structural. When you commit to a venture fund, you're not purchasing an asset you can sell tomorrow. You're committing capital to a 10-year partnership where the manager (the GP) calls that capital gradually, usually over three to five years, as investments are made.
This has practical consequences that surprise first-time LPs. You don't wire everything on day one. You will receive capital calls, sometimes at inconvenient moments. And missing one has real consequences — dilution, or in the worst case, default.
My standing advice: model your liquidity before you commit, not after the second capital call arrives.
The J-curve is not a bug
For the first several years of a fund's life, your position will look worse before it looks better. Capital is going out, fees are being paid, and nothing has been realized yet. On paper, you're underwater. This is the J-curve, and it's not a sign the manager is failing; it's the physics of the asset class.
Value creation in early-stage companies takes time.
Our typical arc: fundraising and first investments in years 0–2, portfolio build-up through year 4, value creation through year 7, and harvesting — exits, secondaries, distributions — from year 7 onwards. If you need the money back in five years, venture is the wrong asset class. Full stop.
This is also why LPs should learn to read fund metrics with the right eyes. TVPI tells you the market value of your investment, including unrealized positions. DPI tells you what's actually back in your bank account. Both matter, but they answer different questions — and in today's environment, where liquidity is the topic in every LP conversation, DPI is the number that separates funds that mark well from funds that return capital.
Fees and carry: what you're actually paying for
The standard model — roughly 2% annual management fee on committed capital, 20% carried interest on profits — gets criticized a lot, sometimes fairly. But it's worth understanding what each piece does.
The management fee is an operational necessity: team salaries, legal and compliance, sourcing, portfolio support. It's what allows a fund to be a professional organization rather than a hobby.
The carry is the alignment mechanism. In a typical distribution waterfall, LPs get their capital back first, then a preferred return — usually a 6–8% hurdle - before the GP sees a cent of carry. Only then does profit split 80/20. The hurdle is an insurance policy. The carry is what makes GPs win only if LPs win.
When you evaluate a fund, look at whether the GP has meaningful skin in the game — at Eleven, the partners commit €2 million of our own capital alongside our LPs.
The power law applies to funds, too
Everyone knows one company can return an entire fund. Fewer people internalize that the same distribution applies to funds themselves. Looking at net TVPI across vintages, the gap between median and top-decile funds is enormous - and it's the top decile that generates the returns that justify the asset class.
This has two implications for angels:
- Manager selection matters more than in almost any other asset class — track record, team stability, thesis clarity, and honest LP references are not a checklist formality.
- Portfolio construction matters: the data consistently shows that concentrated portfolios of five or ten direct investments carry a high probability of losing money, while portfolios of 30–40 companies dramatically improve the odds of a solid return. That's not a coincidence, it's exactly the portfolio size most institutional seed funds build toward.
Direct, fund, or both?
Here's the comparison I walk angels through. A €250,000 direct investing strategy typically gets you around ten companies, small ownership stakes, no board seat, and a passive role in rounds someone else prices. The same €250,000 as an LP in a fund gets you exposure to 35–40 companies, a manager who leads rounds and sits on boards, and follow-on capacity into Series A and beyond — in exchange for fees and carry.
Neither is wrong. But in my experience, the most effective strategy is hybrid: invest directly where you have genuine domain expertise and deal access, and use a fund position for diversification, institutional diligence, and access to rounds you couldn't lead yourself.
The best version of this is genuinely collaborative. Angels bring early access, local trust, and operator networks. Funds bring diligence, governance, and follow-on capital. We've seen this loop compound over a decade: an angel introduced us to Payhawk, we wrote the first institutional check, Payhawk became a unicorn, and its founder is now an angel and LP in our third fund, sharing deals back with us. That flywheel, not any single investment, is the real return of building an ecosystem.
What to ask before you commit
If you take one thing from this piece, take this checklist. Before committing to any fund, ask about:
- track record (is past success a pattern or luck?),
- team stability,
- thesis clarity,
- alignment (GP commitment, fee structure, carry vesting),
- liquidity (especially now) —what is the DPI history, what is the actual exit record, and what optionality exists via secondaries?
And talk to existing LPs. Not the ones the GP hand-picks — find your own.
Venture is a long game governed by the power law, and it rewards LPs who understand the mechanics before they commit, not after. The angels who do best aren't the ones chasing the hottest deal. They're the ones who plan their liquidity, diversify deliberately, and pick partners — in both senses of the word — they can trust for a decade.
