Raising a Fund in 2025: Hard Truths & Smart Strategies from Cindy Padnos 🚀
Hard truths, smart strategies, and what second-time fund managers keep getting wrong
For fund managers raising in today’s challenging market, few voices carry as much weight as Cindy Padnos. Founder of Illuminate Ventures, Padnos has navigated multiple cycles, closed funds both solo and with partners, and—most importantly—knows exactly what it takes to survive and thrive in this environment.
I sat down with Padnos to talk about fundraising in today’s economy, what second-to-fifth-time GPs are getting wrong, and how to strategically position yourself for success.
How Padnos Got Here: From Founder to Fund Manager 💡
Believe it or not, Padnos doesn’t even think of herself as having a "career in finance."
“You’ll laugh at me,” she said, “but I never felt, and I still don’t feel, like I have a career in finance.”
When she said that, I was kind of taken aback - when I think of Silicon Valley “women in finance” Padnos is one of the first few women I think of.
Padnos’ background is deeply rooted in operations. Before launching Illuminate Ventures, she was the founder and CEO of a venture-backed startup—an enterprise procurement software company that was ultimately acquired by a public company. This hands-on experience as a founder gave her an unique perspective when she transitioned into investing.
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“When our company was acquired, I was invited by several VCs to come in and help them with their portfolio companies, sit in on partner meetings, and assist with due diligence on new deals,” she explained. “I basically apprenticed with some really amazing VCs—95% of whom were men.”
At that time, there weren’t many structured paths for women in venture. Padnos found herself in rooms where she was often the only woman, which fueled her commitment to supporting underrepresented entrepreneurs.
“There were no groups supporting women in venture,” she recalled. “When they held the very first Women in Private Equity event in Half Moon Bay, I walked into a room with about 300 women. I was like, ‘Are you kidding me? Is this real?’”
Note: In our Discord, we also have a channel dedicated to Advancing Women In Capital
Lesson #1: Being a Solo GP is a Heavy Lift—But It Can Be Strategic 🏋️♀️
Padnos raised Fund II as a solo GP, but not because she wanted to go it alone—she did it to de-risk institutional investor concerns.
“I had heard from so many institutional LPs of their fear of team risk,” she told me. “Even though Jennifer [her eventual partner] and I had worked together before, the best thing to do was raise the fund, close it, deploy it together, and then go out to raise a new fund together.”
The takeaway? If you’re a solo GP considering bringing on a partner, institutional LPs may see that as added risk. They want to see a team that has worked through multiple investment cycles together before committing capital.
Lesson #2: The Anchor Investor Strategy is More Important Than Ever 🎯
For newer managers, raising a fund without an anchor is like climbing Everest without oxygen.
“We had no anchor when we raised our first fund,” Padnos said. “I had no experience raising a fund before. I was a first-time GP. I was a solo GP. I was raising a seed fund before it was even well understood. So we had to actually explain what that meant.”
Fast forward to today, and Illuminate’s latest fund had an anchor—plus returning significant investors. That changed everything.
“Not only do you have a large portion of your fund committed from day one, but you have a track record, credibility, and people who can be references for you,” she explained.
If you’re raising right now, securing an anchor should be your top priority. It validates your fund thesis and makes it exponentially easier to close additional LPs. You are “officially de-risked.”
The main reason that I strongly push this raise strategy on emerging GPs and MDs is so that they do not burn through their 2-2.5% IR and marketing budget very fast. For example, if they have $2M of a $100M budget earmarked for IR/marketing and the thesis completely fails while they’re attempting to find an anchor, hopefully, they will have only wasted perhaps $200-400k of that total, and they can then re-set and get a brand-new thesis. This is why anchor-first raises are FAR safer.
Lesson #3: LPs Are Still in a ‘Wait and See’ Mode—But There’s a Path Through ⏳
Institutional LPs aren’t cutting new checks as easily as they were a few years ago, and Padnos confirmed that they’re still in deliberation mode.
“By the time of the election, most institutional LPs hadn’t yet finalized their plans for 2025,” she said. “They’ve spent the past few months thinking them through, with some still going to committee in January.”
So what does that mean for GPs fundraising today?
It means the bar is higher. LPs want to see distributions. They want to see performance. And they want to see managers who deeply understand how to navigate this environment.
“They have less capital to deploy because returns haven’t materialized as quickly as in past cycles,” Padnos added. “That means you need to show an incredibly compelling ‘why now’ to get their attention.”
Lesson #4: Fundraising Is Just 30% of the Job—Be Prepared for the Rest 📊
Most new GPs underestimate just how much work goes into actually running a venture firm.
“Whoever you choose as your partner has to be someone you have unbelievable trust and rapport with,” Padnos emphasized. “It’s not just about risk mitigation—it’s about carrying the load, the learnings you have from one another, and the breadth of reach you have for deal flow, LP relationships, and back-office management.”
Most critically, Padnos pointed out that new GPs don’t understand how much work happens after the fund is raised.
“Raising capital is somewhat episodic,” she explained. “There’s an intensity period where it’s like having a second job. But there’s so much more work that goes into building and managing a venture firm beyond just raising the fund.”
Translation: If you think raising the fund is the hardest part, you’re in for a surprise.
Final Takeaway: Adapt, Differentiate, and Keep Going 🚀
Padnos’ success didn’t come from playing by conventional rules. It came from deeply understanding the dynamics at play and structuring her fund accordingly.
For GPs raising today, the playbook is clear:
✅ Secure an anchor investor early.
✅ Be strategic about partnerships and team structure.
✅ Recognize that institutional LPs are more cautious than ever.
✅ Understand that raising the fund is only 30% of the job.
And most importantly? Don’t settle.
“This is a tough time to raise,” Padnos said, “but the best managers will figure out how to navigate it.”
Are you one of them? 🔥