Ask AI
Log In Sign Up
Go to Venture Legal
Previous Question Next Question
1
Venture Legal
#investmentperiod #legal #raisingFundIIafterFundI

Fund II Suing Fund I for Access To Shares During Investment Period

Asked by:
Community Member
1
0
Jun 08, 2023
Hello, is the following true? "If there is a future Google in 2024, and Fund II LPs got pre-seed shares but Fund I LPs did not because you deployed too "fast" in years 1 and 2, you could open yourself up to an outright lawsuit in which Fund I LPs sue for access to Fund II's pre-seed shares in Google."

If so, how do you navigate this with a small Fund I where deals with 10x+ profiles are already secured and have delivered?
1 answer
0
Mike Suprovici
Accepted Answer
Jun 08, 2023
Most LPAs have an 'investment period' clause and 'successor fund threshold' to provide alignment around expectations. If you're planning on deploying significantly faster then the investment period, then you should clear this with your LPAC at a very minimum because it affects the return profile and the potential temporal diversification of the fund. 
Add a comment

Log In or Sign Up

Please Log In, or Sign Up to participate in the discussion.

Log In
or
Sign Up

Apply to VC Lab Cohort 17

Get full access to Decile Base and the Decile Hub venture platform for free by joining the VC Lab program.

Apply to VC Lab Cohort 17
Related Questions
Is it common to collect a 3% management fee during the investment period and reduce it to 1% afterward, as long as the total over 10 years doesn't exceed the allocation? 0 May 03, 2023 Can we switch the thesis on a fund mid-stream? 1 May 03, 2023 Can We Double Down on a Company Investment Through Fund II if Already Invested in Fund I? 1 May 03, 2023 How to Structure Capital Calls for a $5M Fund with a 30-Month Investment Period to Avoid Value Loss? 0 May 03, 2023 Are VC and PE Funds exempted from BOI reporting? 1 Nov 21, 2024