Q1. Why is it difficult to establish a new fund? Why is track record so important in fund raising? The main concern is to convince the investors to invest their money in Gobi. Therefore, it is necessary to raise a rational-sized fund. To raise a new fund is not an easy thing to do as everything including the fund structure, team, approach, LP base, and amount of capital have to be defined appropriately. The general partners also need to contribute their own money in order to convince the investors to invest together with them. The track record is very important in fund raising because if Gobi has a good track record, more investors will be interested to invest in it.
Q2. Prepare a SWOT analysis for Gobi Fund II proposal in the context of venture capital fundraising. STRENGTHS:
* Gobi operates in an area where there is a lot of pent up demand (IT and digital media). * Gobi can acts like a bridge for western LPs to invest in Chinese companies. WEAKNESSES:
* It is difficult to raise a new fund and if Gobi do not really have a good track record, it will become harder to gain the investors trust in order to raise the new funds. OPPORTUNITIES:
* May have the advantage in acquiring a higher return from investment in the IT and media market since they already invest in that industry during the early stage. Meaning that they already have the experiences in investing in IT industry, therefore, may not become a problem to earn a high return. THREATS:
* May not be able to get the desired final close as they are high risks involves such as problems with government regulations and risks involved in the development of early stage IT companies.
Q3. If you were Gobi Partners, what would your planning horizon and fund size target be? When would you expect to close? What are the keys to raising the second fund and how large should it be? There is no definite answer in this question as they could be changing depends on the situations. The planning horizons...
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