Fuel Venture Capital is attempting to attract more high-net-worth individuals into its next fund with a novel structure that will give LPs the ability to cash out before the end of the traditional 10-year lifespan.
The firm’s sophomore fund will soon offer a “Fuel VC Note,” which will be a listed, transferable security representing a fractionalized interest in the fund that can be bought and sold throughout the fund’s lifecycle. Public investors can get into the fund through the note for as little as $125,000.
Fuel has held a first close on $124 million for Fund II, which is targeting $300 million, firm founder and managing director Jeff Ransdell told Venture Capital Journal.
The fund will have two sets of investors: “regular” limited partners who commit a minimum of $1 million, and holders of the publicly listed note. Both sets of investors will have access to Fuel’s LP portal and its content.
The $124 million it has already closed on was raised from a traditional set of LPs including institutional investors, family offices and a small number of individuals. Fuel is preparing to launch the note for non-US investors in the coming weeks and is “working through all of the legal needs for US investors right now,” Ransdell said. “It’s not a matter of if, but when.”
Regular LPs pay a 2 percent management fee and 20 percent carried interest – while the public note holders get a break, paying a 1.5 percent management fee and 15 percent carried interest. The fund employs a back-ended carried interest distribution waterfall in which all LP capital must be returned before the GP begins to collect performance fees.


“I think that we will be very successful with this, and wherever there’s success people will watch,” said Ransdell, who was a Merrill Lynch executive before making the move to venture capital in 2017. “I think everybody is going to start to do this.”
The creation of the note was sponsored by a team led by Alistair Evans, director and co-founder of Sequence Capital, a growth investing firm based in the UK.
“[The note] will be listed on the European Stock Exchange, it will have an ISIN or a CUSIP number, and it’s bought and sold like a stock,” Evans told VCJ. “If you go on Bloomberg, you type in the ISIN or the CUSIP number, you’ll have a description page [and] it looks and feels just like every other security.”
Ransdell says that the main point of the new fund structure is to help bring more high-net-worth individuals into the private markets while also providing liquidity in a tough market. “The data suggests that over the next five years the demand for venture capital will increase 2.4X. People are becoming less and less tolerant for not being able to have that which they want,” he told VCJ.
Noteholders will be able to sell in two scenarios: if there is a liquidity event in the underlying fund or, as the firm expects, if a secondary market for the note develops, where the note holders will be able to sell to other interested parties.
“The note holder will be able to sell at any time, provided there is a buyer,” Ransdell said. “Once the fund has closed and the underlying assets appreciate in value the way we think they will, it basically becomes supply and demand. We’re giving [the investors] the ability, hopefully in the short term, to manufacture liquidity through a bid-and-ask spread.”


“The way [the note] is going to be priced is pretty much one-for-one,” Evans added. “If the fund is marked up 3x over time, the value of that note is now three times what I bought it for. If I want to sell and there’s not a liquidity event from the underlying fund, it could be that someone will buy it from me at a discount, providing me liquidity and them the chance to get into the fund after it’s closed.”
Capital deployed
Fuel invests across stages in financial services and IT companies. It held a final close on $166 million from 100 investors in March 2022 for its first fund, which it began raising in 2017, according to a regulatory filing.
Fund II has already made seven investments in companies the firm has “been working with for a while,” Ransdell said. While the firm plans to invest in a total of 25 companies out of the fund, Ransdell predicts it will “return 86.6 percent of the fund on a conservative basis, just from those seven companies.”
Ransdell believes his background is what will make Fuel’s new target of wealthy individuals successful. He spent 20 years at wealth manager Merrill Lynch, overseeing over $130 billion for private clients across the Southeast US, Latin America and the Caribbean.
“I understand that [wealth management] business very well,” he said. “I sat in their shoes. I know how to serve them. I know what it takes to get a client and what it takes to keep a client.”
He allows that getting public market investors to invest in private markets will hold some challenges due to lack of transparency, but he said Fuel is well positioned to help those investors make the move. The firm’s quarterly mark-to-market approach will ease some investors’ hesitations, and the lower minimum check size available through the Fuel VC Note will further encourage new investors to join the market, he predicted.
“We want the transparency because we want the investors who are used to daily mark-to-market,” he said.
As a former wealth management executive himself, Ransdell wants to make it clear to current financial advisers that the industry is evolving and it’s up to them to stay on top of current trends or risk losing their clients.
“Clients will either go to their financial adviser and say, ‘Hey, get this for me,’ or they’ll come directly to us,” he told VCJ. “All we’re trying to say is partner with us. We don’t want to leave you behind.”