Starting a micro VC fund in the UK means settling five things, in roughly this order: what the fund is for, which legal structure holds it, what regulatory permission the manager needs, who commits the capital, and how much of the manager's own money goes in beside it. None of them is exotic. All of them have to be settled before the first pound moves, and most first-time managers meet them in an unhelpful order, usually when an LP asks a question they cannot yet answer.
This page is the spine of The Carry's going-pro series, notes from the UK cap table for the angel who is becoming a manager. It maps the whole build and points to the page that takes each decision apart: the fund structure, the regulatory route, the LP hunt and the GP commitment each get their own treatment.
The fund is the last step of the build, not the first.
What counts as a micro VC fund in the UK?
A micro VC fund is a small, first-generation venture fund, usually run by one or two general partners, that invests committed capital from outside investors into early-stage companies. The term has no legal definition and no official size band. What marks a fund out as micro in practice is the shape of the operation: a new manager, a thin team, a first or second vehicle, and economics that only work because the partners do nearly everything themselves.
The word that matters in that definition is committed. A syndicate assembles investors deal by deal, and each member decides each time. A fund is a blind pool: LPs commit money up front, before any deal exists, on the strength of the manager's mandate and record. That single difference drives almost everything else on this page, from the legal structure to the regulatory position to what LPs demand before they sign.
How does an angel become a fund manager?
In stages, almost always. The common UK path runs from personal angel cheques, through running a syndicate, to a first fund of committed capital. Each step raises the stakes and the obligations, and skipping one tends to show.
The syndicate is the halfway house. It lets an angel lead deals, set terms and build an attributable record while investors still choose every deal themselves; the mechanics are set out in how to start an angel syndicate in the UK. A fund removes that deal-by-deal consent. Managing a blind pool of other people's money is a regulated activity, and the personal side of that shift, what the FCA expects of the individual making it, is the subject of from angel to fund manager: the FCA reality check. That page covers the authorisation reality. This one is the map of the build around it.
What has to be decided before raising a first fund?
Four structural decisions, and most of them before the first serious LP conversation: the legal wrapper, the regulatory route, the investor base and the manager's own commitment.
- Structure. Nearly every UK venture fund is a limited partnership with a general partner entity. Since 6 April 2017 new funds have been able to designate as Private Fund Limited Partnerships under SI 2017/514, a reform of the Limited Partnerships Act 1907. The full anatomy is in what legal structure a UK venture fund uses.
- Regulation. Whether the manager needs FCA authorisation, and what the sub-threshold regime permits, is taken apart in do you need to be an AIFM to run a small VC fund.
- LPs. Who actually commits to a first-time UK manager, and what they want to see first, is covered in where first-time UK fund managers find LPs.
- Commitment. The manager's own money in the fund, and how LPs read it, is the subject of how much GP commitment a first fund needs.
- The EIS route. A manager raising EIS money has a further option: the HMRC-approved EIS fund, with its own approval conditions.
The table above sets the stack out in one place.
Does a micro fund need FCA authorisation?
Managing an investment fund is a regulated activity in the UK, but full authorisation is not automatic for a small manager. Under the current rules, set out on the FCA's AIFMD pages, a manager below the thresholds can operate as a sub-threshold, or small, AIFM: the line sits at €100m of assets under management, or €500m where every fund managed is unleveraged with no redemption rights for the first five years, and the small registered regime exempts three categories of sub-threshold AIFM from full authorisation.
That regime is now under formal reform: FCA consultation CP26/28, published 14 July 2026, proposes a three-tier structure in which a small manager sits below £750m of net asset value, with implementation envisaged around 2028; it is a proposal, not law, and the detail and dates are in the authorisation page of this series. Authorisation and structure are the two places a first-time manager pays for specialist counsel, and neither is a corner worth cutting.
What will LPs ask a first-time fund manager?
Four questions come up in more or less every meeting: what have you backed and what happened; why does this need a fund rather than a syndicate; how much of your own money is going in; and who else has committed.
Track record does the heaviest lifting. LPs want attributable deals, led rather than followed, which is why the syndicate stage matters so much on the way up. On the manager's own money, SVB's emerging-manager guidance puts the expected GP commitment at around 1% of fund size, and typically 1 to 3% in venture; sizing and structures are covered in the GP commitment page. Institutional routes for first-timers do exist: the British Business Bank's Enterprise Capital Funds programme combines public and private money and invests alongside third-party private investors in funds run by first-time or emerging UK managers. The wider LP terrain is mapped in where first-time managers find LPs.
A closing note on what this page is. It is general information about how UK micro funds are built, not financial advice, and not a recommendation to raise a fund or to commit money to one. The rules above carry dates because they move. Check the current position on GOV.UK, and take advice from an FCA-regulated adviser and specialist fund counsel before structuring anything or committing capital.
Frequently asked questions
What is a micro VC fund?
A small, first-generation venture fund, typically run by one or two general partners, investing committed capital from outside investors into early-stage companies. There is no legal definition and no official size band. The practical marker is that the manager is new, the team is thin, and the fund is small enough to sit below the UK regulatory thresholds for full authorisation.
Can an angel investor start a VC fund in the UK?
Yes, and most first-time managers arrive that way, usually in stages: personal angel investing first, then a syndicate that builds an attributable track record, then a fund with committed capital. Managing a fund is a regulated activity, so the regulatory position needs settling early and with specialist advice.
Do you need FCA authorisation to run a micro fund?
Fund management is a regulated activity, but under the current rules a manager below the AIFMD thresholds, €100m of assets under management in the standard case, can operate as a sub-threshold AIFM, and the small registered regime exempts three categories of sub-threshold manager from full authorisation. The FCA is consulting on replacing this regime under CP26/28, published in July 2026, so any answer needs a date on it and specialist counsel behind it.
What legal structure does a UK micro fund use?
Almost always a limited partnership with a general partner entity, and since 6 April 2017 most new funds designate as Private Fund Limited Partnerships under the 2017 reform of the Limited Partnerships Act. The designation gives limited partners a statutory white list of permitted actions and removes the requirement to contribute capital on admission. The structure page in this series covers the detail.
Is this page advice on starting a fund?
No. It is general information about how UK micro funds are typically built, not financial advice, and not a recommendation to raise a fund or invest in one. Structure and authorisation choices depend on individual circumstances, so check the current rules on GOV.UK and take advice from an FCA-regulated adviser and specialist fund counsel before acting.