Fund Closing

Generally speaking, increasing or decreasing an LP's capital commitment post-admittance is accomplished via a simple change agreement countersigned by all parties (a new LPA is not required). In the case of an increase, a "catch-up" ca...

Generally speaking, increasing or decreasing an LP's capital commitment post-admittance is accomplished via a simple change agreement countersigned by all parties (a new LPA is not required). In the case of an increase, a "catch-up" capital call is usually sent. In the case of a decrease, it can only decrease to the amount the LP may have already paid-in. In summary, the requirements are that the requested decrease not go below any paid-in capital (or other measures may need to be discussed), and that the proper paperwork is put into place so that fund accounting can reflect this change appropriately. 

Most capital call notices have a 14 day deadline. However, most LPAs have flexibility built in to accommodate LPs they may not be able to meet the deadline, within reason, due to various circumstances.

Most capital call notices have a 14 day deadline. However, most LPAs have flexibility built in to accommodate LPs they may not be able to meet the deadline, within reason, due to various circumstances.

It's virtually impossible to blend both donations and investments into one fund. Even if it was possible, the legal, setup and maintenance will be cost prohibitive. The most efficient way forward is to create a VC Fund which accepts inve...

It's virtually impossible to blend both donations and investments into one fund. Even if it was possible, the legal, setup and maintenance will be cost prohibitive. The most efficient way forward is to create a VC Fund which accepts investments (not donations) and to structure that traditionally. Then, you can investigate setting up a separate vehicle for donations.

We have migrated several firms on custom legal agreements to Decile Partners. However, the bar for admissions is significantly higher.  Due to the nature of migrations, the Decile Partners team will need to undergo thorough diligence of...

We have migrated several firms on custom legal agreements to Decile Partners. However, the bar for admissions is significantly higher.  Due to the nature of migrations, the Decile Partners team will need to undergo thorough diligence of your operations in addition to your application process prior to making an admissions decision. This is due to the fact that the Partners offering is optimized for Firm Success rather than for just servicing your fund.  Merging bespoke legal operations is significantly less efficient than the integrated Decile Partners offering which is optimized to help your firm be successful via one point of contact. Hence, if your firm is accepted into Decile Partners, it is likely that a custom proposal will need to be generated for the migration. 

Funds generally call capital from limited partners (LPs) in several tranches in order to optimize fundraising - it's simply easier if upon admittance to the Fund, an LP only has to wire say, 20% of its full capital commitment rather than...

Funds generally call capital from limited partners (LPs) in several tranches in order to optimize fundraising - it's simply easier if upon admittance to the Fund, an LP only has to wire say, 20% of its full capital commitment rather than 50%. Sometimes, an LP may wish to send its full capital commitment ahead of time, as "pre-paid" capital, often for convenience. While this is possible, it creates more work administratively and on the banking side to track and silo the pre-paid funds separately - so it's not something to recommend or broadly offer in most cases.  IMPORTANT: Capital calls will "draw down" on pre-paid capital on the same percentage/schedule as the rest of the LPs. However, any pre-paid funds that have not been called CANNOT be used for any purposes, including deployment. 

You should set the default percentage of the PACT at 75% if you're in a developed market and to 50% for emerging markets. The 'best practice' is to increase fundraising momentum. If you have momentum and an increasing number of investor...

You should set the default percentage of the PACT at 75% if you're in a developed market and to 50% for emerging markets. The 'best practice' is to increase fundraising momentum. If you have momentum and an increasing number of investors are committing to the fund, you will be in a strong position to close.  Once you have $1m - $2m in PACTs from a group of LPs (not one LP), then you can begin a formation and closing process, which typically takes 2-3 months.

A fund cannot deploy capital to any portfolio company until it has done a first closing. The minimum in PACTS are as follows: • $10m+ fund: 10% or $1m+ in PACTs are the minimum necessary to complete a first closing. • $5m fund: 20% or $1...

A fund cannot deploy capital to any portfolio company until it has done a first closing. The minimum in PACTS are as follows: • $10m+ fund: 10% or $1m+ in PACTs are the minimum necessary to complete a first closing. • $5m fund: 20% or $1m+ in PACTs are the minimum necessary to complete a first closing. Once a fund completes the 1st closing, it will do a capital call from its LPs for ~25% of committed capital. The fund will use the capital received from the capital call to pay for organizational expenses and to invest in its first portfolio companies. During this time, the fund manager must continue to fundraise until reaching the target fund size - it is critical to keep the pedal to the metal on fundraising. 

Decile Start customers enjoy benefits including but not limited to: • Private office hours • A private slack channel • Expert assistance with questions • Assistance with LP materials and interactions • Pitch optimization • General compli...

Decile Start customers enjoy benefits including but not limited to: • Private office hours • A private slack channel • Expert assistance with questions • Assistance with LP materials and interactions • Pitch optimization • General compliance guidance Please contact Mike Suprovici for more details. 

Please read this for more information regarding Decile Launch, including the cost: https://govclab.com/2023/05/26/meet-decile-launch/

Please read this for more information regarding Decile Launch, including the cost: https://govclab.com/2023/05/26/meet-decile-launch/

As of this date, Decile Start costs $10K. Please contact Mike Suprovici for more details. 

As of this date, Decile Start costs $10K. Please contact Mike Suprovici for more details. 

As of the date of this answer, Decile Partners can generally work with funds intending to domicile in Delaware (USA) and Ontario Canada. 

As of the date of this answer, Decile Partners can generally work with funds intending to domicile in Delaware (USA) and Ontario Canada. 

Generally speaking, no - if an LP commits $100K, then on the first close, whatever percentage the capital call is for (typically 20% or 25%) should be wired by the limited partner. For example, an LP that has committed $100K to the fund ...

Generally speaking, no - if an LP commits $100K, then on the first close, whatever percentage the capital call is for (typically 20% or 25%) should be wired by the limited partner. For example, an LP that has committed $100K to the fund receives a first close capital call notice for 20% of the LP's committed capital - so the LP wires $20K. The LP should generally not wire more than $20K, as this introduces additional accounting complexities - even if the LP were to so, the additional capital would not be able to be deployed. Decile Partners and VC Lab strongly recommend waiting until a fund has at least 10% of the target fund size committed to begin a first close - however this percentage is not the same as the capital call percentage. Please read the following regarding capital calls: https://govclab.com/2023/05/07/vc-capital-calls/

Generally speaking, fund managers will work with their attorneys to defer costs until the fund does a first close. Then, the fund manager can use some of the management fees and sometimes the fund itself to pay for expenses. With regard...

Generally speaking, fund managers will work with their attorneys to defer costs until the fund does a first close. Then, the fund manager can use some of the management fees and sometimes the fund itself to pay for expenses. With regards to fund formation attorneys, please read the following: https://govclab.com/2023/05/26/vc-fund-formation-attorneys/ Please read this for more information on managing fund expenses: https://govclab.com/2022/11/07/managing-fund-expenses-for-venture-capitalists/

The recommended time frame is ASAP. Subsequent closings will depend on demand - however once you do a 1st close most LPAs specify that you have 18 months to close the rest of the fund (often called the Fundraising Period). Depending on t...

The recommended time frame is ASAP. Subsequent closings will depend on demand - however once you do a 1st close most LPAs specify that you have 18 months to close the rest of the fund (often called the Fundraising Period). Depending on the LPA, this can be extended, however this isn't always an option, and may not be strategically a good move.  TL:DR - don't rely on extending the Fundraising Period if possible.   Decile Partners and VC Lab strongly recommend continuing to prioritize fundraising (~80% of a fund manager's time and focus) until the entire fund has been closed. 

VC Lab and Decile Partners strongly recommend the following: • 10% is the minimum first close target size for funds that are $10m or larger.  • 20% is the minimum first close target size for funds under $10m.  The key is to get the fund...

VC Lab and Decile Partners strongly recommend the following: • 10% is the minimum first close target size for funds that are $10m or larger.  • 20% is the minimum first close target size for funds under $10m.  The key is to get the fund operational and to be able to fund its warehoused deals. Sometimes a fund may have to do a smaller 1st close of just shy of 10% so that it can get operational. If the choice is between being operational and reaching the desired amount, being operational is by far the most important (if within striking distance). Attempting to do a first close significantly under these targets (particularly for a fund under $10M), may leave a fund unable to pay organization expenses and/or fund warehoused deals (to say nothing of deploying capital or how LPs might view things). TL:DR - don't do it. 

Generally speaking, ERAs must file the Form ADV within 60 calendar days of becoming an ERA - thus they generally must file within 60 calendar days of a fund's first closing, in most cases. Please see the following (Item 13 in particular...

Generally speaking, ERAs must file the Form ADV within 60 calendar days of becoming an ERA - thus they generally must file within 60 calendar days of a fund's first closing, in most cases. Please see the following (Item 13 in particular) for more information: https://www.sec.gov/about/forms/formadv-instructions.pdf

The ManCo entity should generally be registered at the same time as the Fund's other entities, using specific (and not generic) legal agreements. Trying to roll such an entity into the Fund's structure later on will slow things down, and...

The ManCo entity should generally be registered at the same time as the Fund's other entities, using specific (and not generic) legal agreements. Trying to roll such an entity into the Fund's structure later on will slow things down, and most likely it will be more efficient and cost effective to discard it (and set up a new entity) than to roll it in. TL:DR: It’s not efficient to do it this way. A Fund's entities should generally all be formed at the same time.

A fund manager probably needs to spend 20 hours per top Rockstar company, spread over a few months.

A fund manager probably needs to spend 20 hours per top Rockstar company, spread over a few months.