Venture Legal

The Venture Share agreement is for individuals, not companies.

The Venture Share agreement is for individuals, not companies.

No, you don’t want to sign stuff with advisors until you are closing.  There should be a confidentiality provision in the agreement you sign with an advisor.

No, you don’t want to sign stuff with advisors until you are closing.  There should be a confidentiality provision in the agreement you sign with an advisor.

Any funds selling to U.S. investors are required to comply with U.S. securities laws including requirements to register with the SEC and the applicable exemptions.  You can request an intro to a legal advisor directly from your VC lab re...

Any funds selling to U.S. investors are required to comply with U.S. securities laws including requirements to register with the SEC and the applicable exemptions.  You can request an intro to a legal advisor directly from your VC lab representative.

Under US securities laws, certain private funds are not required to be registered or regulated as investment companies laws such as under the following exclusions: ·       Traditional 3(c)(1) Fund (no more than 100 beneficial owners) ·  ...

Under US securities laws, certain private funds are not required to be registered or regulated as investment companies laws such as under the following exclusions: ·       Traditional 3(c)(1) Fund (no more than 100 beneficial owners) ·       3(c)(7) Fund (limited to qualified purchasers) ·       3(c)(1) Qualifying Venture Capital Fund (no more than $10M from no more than 250 beneficial owners). Fund advisers are required to register with the SEC unless they are exempt from applicable registration requirements such as investment advisers who solely manage qualifying venture capital funds or solely manage private fund assets of less than $150 million. They are, however, required to make certain filings and report certain information annually to the SEC as exempt reporting advisers.

Everything is defined in the LPA. As a rule, you don’t want any one LP to own 25% or greater, otherwise they control the fund. You could build in custom protections. You can read a sample and simple LPA with the Cornerstone for some exa...

Everything is defined in the LPA. As a rule, you don’t want any one LP to own 25% or greater, otherwise they control the fund. You could build in custom protections. You can read a sample and simple LPA with the Cornerstone for some examples on how the control provisions work with the Majority in Interest of the Limited Partners.

Once LPs have invested in the fund, you will need to provide reports on your companies. Before that, you can show select companies in your data room to investors who have signed a letter of intent.

Once LPs have invested in the fund, you will need to provide reports on your companies. Before that, you can show select companies in your data room to investors who have signed a letter of intent.

Yes. The Firm is the brand. The fund can be called something else if you want.

Yes. The Firm is the brand. The fund can be called something else if you want.

We don’t have a template affirmation agreement. Everyone does this differently, but in general most people start with a verbal agreement first.

We don’t have a template affirmation agreement. Everyone does this differently, but in general most people start with a verbal agreement first.

Fund vehicles in Delaware are commonly set up as LLCs. Please do not think about set up until you have at least 10% of your fund Hard Circled. This is an absolute waste of time.

Fund vehicles in Delaware are commonly set up as LLCs. Please do not think about set up until you have at least 10% of your fund Hard Circled. This is an absolute waste of time.

“The information herein is strictly confidential and is intended for authorized recipients only. The content of this presentation is shown for information purposes only and is not intended as investment advice, or an offer or solicitatio...

“The information herein is strictly confidential and is intended for authorized recipients only. The content of this presentation is shown for information purposes only and is not intended as investment advice, or an offer or solicitation with respect to the purchase or sale of any security. The strategy presented herein represents the strategy of the General Partner of the Fund as of the aforementioned date and may vary at the discretion of the General Partner. There is no guarantee that any investment objective will be achieved. Past performance is not indicative of future results. Actual results may differ materially from those expressed or implied. Recipients should not assume that any companies identified in this presentation, are or will be, investments held by the Fund. Any projected returns presented herein are shown for illustrative purposes only. There can be no guarantee the Fund will achieve these results. Venture investing is risky and you could lose some or all of your investment.”

yes, they are for the life of the fund

yes, they are for the life of the fund

Generally speaking for Delaware domiciled funds, the ManCo and GP entity are LLCs, and the fund itself is a Limited Partnership. The fund managers own the ManCo, which owns the majority of the GP entity. The Limited Partnership (where th...

Generally speaking for Delaware domiciled funds, the ManCo and GP entity are LLCs, and the fund itself is a Limited Partnership. The fund managers own the ManCo, which owns the majority of the GP entity. The Limited Partnership (where the limited partners invest into) is managed by the GP entity. 

This is handled by LPAs by something called a Key Person Clause. You can see how the Cornerstone LPA handles this by searching the agreement for ‘Key Individuals’ and for ‘Limited Operations’ mode: But, basically, you can tell them ...

This is handled by LPAs by something called a Key Person Clause. You can see how the Cornerstone LPA handles this by searching the agreement for ‘Key Individuals’ and for ‘Limited Operations’ mode: But, basically, you can tell them that the fund will go into limited operations mode and then, the interests of the fund will likely be distributed to the limited partners based on the terms of the LPA.

For Fund 1, you should pick one approach. It’s hard enough to sell one or the other (FoF is a much harder sell BTW). The LPA will need to updated by counsel if you want to go with this approach.

For Fund 1, you should pick one approach. It’s hard enough to sell one or the other (FoF is a much harder sell BTW). The LPA will need to updated by counsel if you want to go with this approach.

Offer to get on a call. You need to have a pre-existing relationship and to ensure that they are wealthy before officially pitching them. If you are just getting feedback from a friend, then that is fine.

Offer to get on a call. You need to have a pre-existing relationship and to ensure that they are wealthy before officially pitching them. If you are just getting feedback from a friend, then that is fine.

Yes - there will so many conflicts for you to have to work through, that it likely will not be worth it

Yes - there will so many conflicts for you to have to work through, that it likely will not be worth it

Under U.S. securities laws, the issuance of securities requires registration with the SEC or an exemption from registration.   For employees who are not accredited investors, the fund should consider ways to compensate such employees tha...

Under U.S. securities laws, the issuance of securities requires registration with the SEC or an exemption from registration.   For employees who are not accredited investors, the fund should consider ways to compensate such employees that do not involve the issuance of securities unless there is an exemption such as through a stock option plan. Note that the definition of accredited investor does include "knowledgeable employees" of certain private funds.  This includes directors and certain executive officers of the private fund, or of an affiliated person of the private fund that manages the investment activities of the private fund (“affiliated management person”). This also includes employees who participate in the investment activities of the private fund or other private funds or investment companies managed by the affiliated management person.

Most LPAs don't give LP this option without specific approval which may be withheld.

Most LPAs don't give LP this option without specific approval which may be withheld.

Funds are viewed as high profile targets for lawyers, so choose a safe name that does not have conflicts with other trademarks.

Funds are viewed as high profile targets for lawyers, so choose a safe name that does not have conflicts with other trademarks.

No. “Fund rules” represent how you manage areas of conflict. For example, many VCs created rules that preclude them from making investments outside of their fund. “Investment criteria” represents what you look for in a company. I.e....

No. “Fund rules” represent how you manage areas of conflict. For example, many VCs created rules that preclude them from making investments outside of their fund. “Investment criteria” represents what you look for in a company. I.e. pre-seed in Italy etc…

The General Partnership Entity manages the carry and is governed by the Stewardship agreement that you are referring to. The Limited Partnership Entity is where the LPs invest and it allocates the carry to the General Partnership Entity....

The General Partnership Entity manages the carry and is governed by the Stewardship agreement that you are referring to. The Limited Partnership Entity is where the LPs invest and it allocates the carry to the General Partnership Entity. The Limited Partnership Entity is governed by the Cornerstone LPA. Class V shares are typically reserved for investors in the General Partnership Entity. So, if you have an investor that wants to make an investment in the General Partnership Entity, you would use Class V shares. Class A are for everyone else (GPs, VPs etc..)

The active investment period is normally between 2 and 4 years. Read the Cornerstone LPA for how these terms are set.

The active investment period is normally between 2 and 4 years. Read the Cornerstone LPA for how these terms are set.

You can’t sign any agreements until all the entities are formed

You can’t sign any agreements until all the entities are formed

Europe has extensive laws governing general solicitation. There are pre marketing and post marketing laws. Some guidance for best practices everywhere in the world is below: https://govclab.com/2022/06/28/general-solicitation/

Europe has extensive laws governing general solicitation. There are pre marketing and post marketing laws. Some guidance for best practices everywhere in the world is below: https://govclab.com/2022/06/28/general-solicitation/

It’s not solicitation because these are lps that have signed PACTs

It’s not solicitation because these are lps that have signed PACTs

If you want to build an enduring venture firm, that yes, it is mandatory.

If you want to build an enduring venture firm, that yes, it is mandatory.

It will be the GP. Don’t do this until after you close.

It will be the GP. Don’t do this until after you close.

There is no issue with building up your network provided that you are not mentioning your fund while fund raising or soliciting in any manner that could be considered general solicitation.

There is no issue with building up your network provided that you are not mentioning your fund while fund raising or soliciting in any manner that could be considered general solicitation.

Many LPAs will prevent your fund to invest in another fund. Investment into a non-operating company like a fund most likely counts against your 20% non qualifying investment bucket to maintain the VC exemption for the Manager.

Many LPAs will prevent your fund to invest in another fund. Investment into a non-operating company like a fund most likely counts against your 20% non qualifying investment bucket to maintain the VC exemption for the Manager.

You can’t move an SPV to a fund.

You can’t move an SPV to a fund.

Yes, this possible. You can make a company a VP if you would like.

Yes, this possible. You can make a company a VP if you would like.

It’s virtually impossible/very difficult for you to transfer an interest that you don’t own 100%.

It’s virtually impossible/very difficult for you to transfer an interest that you don’t own 100%.