All Questions

Should LPs ask for a shorter term for a venture capital fund than 10 years, it may be an indication that the LPs do not understand the asset class and are not aligned with the fund and its managers. Proceed with caution - further discuss...

Should LPs ask for a shorter term for a venture capital fund than 10 years, it may be an indication that the LPs do not understand the asset class and are not aligned with the fund and its managers. Proceed with caution - further discussions may be warranted. 

Below is a list of the different slides needed in a standard fund presentation. We recommend that you follow the guidelines exactly to build the early versions of the deck, then refine the presentation with feedback from pitching LPs. N...

Below is a list of the different slides needed in a standard fund presentation. We recommend that you follow the guidelines exactly to build the early versions of the deck, then refine the presentation with feedback from pitching LPs. NECESSARY FUND SLIDES: • Title: Displays the name of the fund, date of last update, and contact information of key individuals. • Thesis: Provides the one sentence investment Thesis. • Team: Introduces Managing Partners with a picture and three short bullets on each. • Team (Continued): Introduces Partners and Venture Partners with a picture and three short bullets on each. • Value Add: Describes the unique value that the fund offers to portfolio companies to generate LP returns. • Market: Demonstrates the market attractiveness through a simple chart, table, or statistic. • Track Record: Showcases 1-3 relevant deals with logos, few word descriptions, value added, and markup achieved. • Pipeline: Highlights 1-3 potential deals by sharing a general overview of the company without sharing specifics. • Allocation: Tabulates the number of deals by stage along with estimated investment, valuation, and ownership details. • Returns: Exhibits anticipated returns from hypothetical portfolio companies categorized by exit sizes. • Liquidity: Illustrates up to three projected fund outcome scenarios using multiple or IRR, possibly through a pie chart. • Economics: Provides a table outlining fund economic terms like Minimum Investment Amount, Management Fees, and Carried Interest. • Thank You: Provides the fund's tagline, target closing date, and contact information for the General Partners. • Disclaimer: Contains legal disclaimers to mitigate liability. OPTIONAL FUND SLIDES: • Deal Warehouse: Highlights 1-5 completed deals that will be transferred into the fund with company logos, brief descriptions, relevance to thesis, and investment terms. • Strategy: Describes how you will access the market for the best returns. • Operations: Explains any unique operational processes or systems. • Competition: Identifies relevant firms focused on the same markets with differentiation points. • Partners: A list of partners, possible as a logo pile, to improve the credibility of the fund. • Advantages: A list of items that help the fund to stand out. • Appendix: Houses updated old slides or additional research and data pertinent to the market segment.

Generally speaking, an Advanced Subscription Agreement (commonly known as an ASA and designed for use in the United Kingdom), is conceptually similar to a SAFE (originally designed for use within the United States).  However, there are ...

Generally speaking, an Advanced Subscription Agreement (commonly known as an ASA and designed for use in the United Kingdom), is conceptually similar to a SAFE (originally designed for use within the United States).  However, there are a few fundamental differences to be aware of, though these may vary depending on how the ASA is drafted - here are a few notable ones: • The ASA was designed to be eligible for certain tax advantages under the Enterprise Investment Scheme (EIS and the Seed Enterprise Investment Schemes (SEIS); • The ASA has a "Long Stop" term, essentially a date before which a conversion event (as defined in the ASA) must happen - otherwise the ASA automatically converts to equity on a pre-agreed price (this is not a concept in standard SAFES); • In order to qualify for the aforementioned tax advantages, it appears that the Long Stop date must be no later than 6 months after the issuance of the ASA; • 6 months may not be sufficient time for a startup to reach a qualifying conversion event (i.e. a preferred equity financing) - so this is something to carefully consider. *Please consult UK tax advice and/or counsel should you have questions about a specific set of circumstances.   

The best article to read about distribution waterfall is this one: Venture Fund Economics 

The best article to read about distribution waterfall is this one: Venture Fund Economics 

Please refer to the the Decile Hub Privacy Policy and Terms of Use for more details. Perhaps more importantly however, the Decile Group organization abides by the principles of the Mensarius Oath and we take this responsibility very seri...

Please refer to the the Decile Hub Privacy Policy and Terms of Use for more details. Perhaps more importantly however, the Decile Group organization abides by the principles of the Mensarius Oath and we take this responsibility very seriously. We do periodic audits, and these efforts will continue to increase as we scale the platform. 

Not yet. There are several privacy, ethical and business issues with this approach that would need to resolved before rolling a feature like this out. For example, the portfolio company many not want this to occur because they typically ...

Not yet. There are several privacy, ethical and business issues with this approach that would need to resolved before rolling a feature like this out. For example, the portfolio company many not want this to occur because they typically want to control this information. Also, though there is standardization with regards to the valuation policies of Decile Partner firms, that's not the case for other firms.

A fund typically requires approval from the Limited Partner Advisory Committee (LPAC) to proceed with a follow-on investment into a portfolio that was an angel investment of the general partner because it's a conflict of interest. 

A fund typically requires approval from the Limited Partner Advisory Committee (LPAC) to proceed with a follow-on investment into a portfolio that was an angel investment of the general partner because it's a conflict of interest. 

Do not form your fund and send LPAs to limited partners prior to you having at least $1m in PACTs signed or 10% of the fund, whichever is greater. This is a major mistake with dire consequences.  Also, please note that the arrangement th...

Do not form your fund and send LPAs to limited partners prior to you having at least $1m in PACTs signed or 10% of the fund, whichever is greater. This is a major mistake with dire consequences.  Also, please note that the arrangement that is suggested above has a very low probability of success and will possibly trigger broker-dealer issues as well.  If you need working capital, you can take investors in the GP entity. You can determine the valuation on the GP entity by working backwards from a low or middle case scenario of the fund model. So, doing some back of the napkin math, if your model is projecting that you will do a 2x on $5m fund - the valuation of the GP entity (the carry) is $1m. So, an investor can purchase 10% of the GP entity for $100k. That $100k will flow through to the ManCo (you) as working capital.  That being said, just because you can do this, it doesn't mean that you should. It's very rare that outsiders (including LPs) can help you with fundraising in a Fund 1. The LPs that invest in Fund 1s are mission aligned and are investing in the Managing Partner because they know and trust them. 

The fund admin functionality which includes the capital call tool is currently only available for Decile Partners firms. 

The fund admin functionality which includes the capital call tool is currently only available for Decile Partners firms. 

Yes - you should pause conversations until your figure out where you will domicile together with LPs. Please note that the Singaporean domicile and licensing process can take 1 year or more. Unless you are based in Singapore, we recommen...

Yes - you should pause conversations until your figure out where you will domicile together with LPs. Please note that the Singaporean domicile and licensing process can take 1 year or more. Unless you are based in Singapore, we recommend that you try to domicile somewhere else. 

By law, all offers and sales of securities within the United States must be either: • registered with the Securities and Exchange Commission (the SEC); or • issued relying on an available exemption from such registration. Generally spea...

By law, all offers and sales of securities within the United States must be either: • registered with the Securities and Exchange Commission (the SEC); or • issued relying on an available exemption from such registration. Generally speaking, "public" type offerings (for example an IPO) must be registered (such as any stocks publicly trading on the Dow Jones or NASDAQ) - this is a long and complex process. When startups raise capital through private markets, i.e. raising from venture capital funds, the offerings are private by definition ("unregistered"). Therefore, they rely on an exemption from registration. • As startups almost universally (when fundraising from venture capital funds) issue unregistered securities, there are no specific legal considerations or potential risks to take into account other than the risks associated with investing into startups in general. • Startups typically work with counsel to issue securities, who usually shoulder the burden of ensuring compliance for exemptions from registration. *Please consult experienced local counsel if you have questions pertaining to securities issued in other jurisdictions.

The Fund Sheet in the VC Lab curriculum refers to the fund model that was developed during the accelerator.

The Fund Sheet in the VC Lab curriculum refers to the fund model that was developed during the accelerator.

UPDATE: February 5, 2024 Cornerstone version 3 is available to download from VC lab here.

UPDATE: February 5, 2024 Cornerstone version 3 is available to download from VC lab here.

Mercury Bank and Grasshopper Bank are good options. 

Mercury Bank and Grasshopper Bank are good options. 

Usually, the LP will work to find a buyer for the defaulted position. That is the most common way to manage this. 

Usually, the LP will work to find a buyer for the defaulted position. That is the most common way to manage this. 

Non-Investments are assets of the Fund that are not tied to Investments (ie investments in portfolio companies or cash equivalents).  For example, the Fund may have proceeds from a litigation that is unrelated to an investment.

Non-Investments are assets of the Fund that are not tied to Investments (ie investments in portfolio companies or cash equivalents).  For example, the Fund may have proceeds from a litigation that is unrelated to an investment.

In the US, offerings of securities must be registered with the SEC or made pursuant to an exemption from registration. Regulation S provides an exemption for issuers to offer and sell securities in offshore transactions.  Regulation S ha...

In the US, offerings of securities must be registered with the SEC or made pursuant to an exemption from registration. Regulation S provides an exemption for issuers to offer and sell securities in offshore transactions.  Regulation S has two general conditions: (i) the offer or sale must be made in an offshore transaction; and (ii) there are no “directed selling efforts” – activity which could have the effect of conditioning the market in the United States.  VC funds can consider whether a certain offering of its fund interests outside the US can qualify for exemption under Regulation S.  VC funds should consult counsel to determine whether an offering qualifies for the Regulation S exemption and whether the offering complies with the laws of the overseas jurisdiction where the offering takes place.

The Generally Accepted Accounting Principles (GAAP) and ASC 820 (formerly FAS 157) are involved in valuation policy by providing a framework for measuring and reporting the fair value of assets and liabilities. Under ASC 820, investments...

The Generally Accepted Accounting Principles (GAAP) and ASC 820 (formerly FAS 157) are involved in valuation policy by providing a framework for measuring and reporting the fair value of assets and liabilities. Under ASC 820, investments are categorized into three levels based on the observability of inputs used in their valuation. Level 1 investments include listed stocks, bonds, funds, or any assets that have a regular mark-to-market mechanism for setting a fair market value, Level 2 investments use observable inputs other than regular mark-to-market mechanisms, and Level 3 investments use unobservable inputs. These standards ensure consistency and transparency in financial reporting.

There is no hard data on this because most of the filings are done at a fund level, instead of at the Firm level. A firm will often manage a family of funds. VC Lab estimates that ~9,500 new VC firms will launch within 5 years.

There is no hard data on this because most of the filings are done at a fund level, instead of at the Firm level. A firm will often manage a family of funds. VC Lab estimates that ~9,500 new VC firms will launch within 5 years.

For the General Partner to unilaterally decide to wind up a fund is an edge-case - there aren't "typical" types of cases to speak of here. However as one example, a pending SEC investigation (which could implicate the General Partner) co...

For the General Partner to unilaterally decide to wind up a fund is an edge-case - there aren't "typical" types of cases to speak of here. However as one example, a pending SEC investigation (which could implicate the General Partner) could be one of the causes for a General Partner to make such a decision.  While it's an edge-case, should a General Partner choose to go this route, they would be obligated to liquidate the Fund's assets and distribute the the proceeds to Limited Partners (see Cornerstone 6.3) - so it generally isn't considered "too risky" for the asset class.  It is not industry standard for LPs to need to approve of such a decision by the General Partner - however per the Cornerstone a majority of the LPs can also put the Fund into limited operations mode.