How does termination work with a Start Fund?
The Start Fund Investment Lead Agreement can be terminated in one of two ways. First, the Investment Lead may decide to move the limited partner (LP) under a general partner (GP) or management company (ManCo) and terminate the Start Fund for a larger engagement with Decile Partners for support. Second, Decile Group may terminate the agreement if the Investment Lead fails to fulfill responsibilities, including fundraising, investing, and managing the portfolio.
What constitutes "Failure to fulfill Investment Lead Responsibilities" in a Start Fund?
The Investment Lead Agreement lists the responsibilities of the Investment Lead, including (i) raising capital; (ii) research and consulting relating to the deployment of capital; (iii) updating portfolio valuations; and (iv) assisting with distributions. If the Investment Lead fails in these core activities, they will be notified and given 45 days to resolve the situation amicably.
What is considered a "material breach that cannot be reasonably remedied" in a Start Fund?
Material breaches are breaches that impact the Start Fund or Decile Group in a significant manner. Examples include reputational damage, violations of securities laws, misappropriation of fund assets, or other violations of fiduciary duty. A material breach may lead to the immediate termination of the agreement without the time to cure of 45 days.
How does the 45-day cure period process work in a Start Fund?
If a breach is identified, Decile Group will notify the Investment Lead in writing and the Investment Lead will have 45 days to remedy the breach. Decile Group will check in with the Investment Lead to validate that the breach has been resolved. To cure the breach, the Investment Lead may resume fulfilling responsibilities, increase time dedication, or fix any identified issues. At the end of the 45 days, if the breach is cured, then everything will return to normal, and, if the breach is not cured, then the agreement may be terminated.
If the Investment Lead is terminated, how are existing LPs and portfolio companies handled?
If the Investment Lead is terminated or ceases to perform investment activities, Decile Group will return unused capital to the limited partners less the expected amount of remaining fees. The existing Start Fund portfolio, if any, will be managed by Decile Group until all portfolio companies exit or until the end of the fund's life.
If terminated as the Investment Lead, how are ongoing management fees and future carried interest handled?
Upon termination of Investment Lead, General Partner shall be entitled to receive Investment Lead’s future Management Fees and Carried Interest in the Fund in an amount to compensate General Partner in filling the role of Investment Lead and to cover any expenses of General Partner or ManCo due to such breach, each as determined by General Partner in good faith. This is forward-looking only (future fees/carry) and does not affect already-earned fees or carried interest. Decile Group has discretion in determining compensation amounts to be fair.
What is the dispute resolution process with a Start Fund?
Parties with a dispute will first attempt to resolve the dispute through direct discussions, followed by mediation if necessary. If the dispute continues following mediation, the dispute will be adjudicated through the Delaware courts.