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Is it Ok for a fund to invest into a company via an AngelList RUV?

Is it Ok for a fund to invest in a startup via their AngelList RUV? It's a highly oversubscribed deal and the company is limiting our check size to significantly less than what we normally do and is also asking to come in via their RUV. What are the challenges with doing this if it's even Ok to do?

Top answer:

No. An RUV is considered a non-qualified investment, just like any other SPV. In addition, it will delay your taxes and because you're not on the cap-table, you will struggle to get the information required to realize markups and manage ...

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The new SEC rules limit preferential treatment in Side Letters (Section 8.3). Historically, institutional LPs negotiated preferential terms via Side Letters, so I want to know if they’re now pushing back or finding workarounds. I also want to understand how biotech/health funds are handling regulatory carve-outs that LPs previously included in Side Letters.

Top answer:

Side letters are still common and allowed by the SEC rules. Ethical managers typically disclose these side-letters because the terms can often affect the performance of the fund.

 -  Mike Suprovici
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What are the specific criteria or process for determining when a portfolio company qualifies for a follow-on investment from the fund?

Top answer:

The criteria for determining when a portfolio company qualifies for a follow-on investment typically depend on the fund's size, strategy, and the growth trajectory of the company. Factors include the potential for future rounds, market c...

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Is the accounting section externally audited? What is the control for the information entered?

Top answer:

Every transaction that is recorded in the system needs to have supporting documentation, such as a legal agreement. Firms may also use an external auditor to further verify the date. However most small funds in Delaware often don't do an...

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1. What happens to the overall committed capital for portfolio companies in case of a partial or complete LP default - how can GPs mitigate the risk that there is no additional capital once there is a default (e.g. a forced sale is not possible?)

Top answer:

Below are the options for managing a defaulting LP: Option 1: The cleanest and best option is for you have the defaulting LPs sell their position other buyers. To ‘replace’ LPs - new LPs need to buy the entire position from the defaulti...

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Why doesn't the cornerstone LPA contain an exclusion of consequential damages?

Many contracts in Delaware include clauses that exclude or limit consequential damages. Courts will generally enforce these limitations, but the specific language used is crucial. https://info.dechert.com/10/8352/landing-pages/like-bigfoot--a-clear-and-settled-definition-of--consequential-damages--remains-elusive.asp?sid=d79f0805-0041-47fc-8610-79df273d094e 

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