All Questions

Venture Investors typically take preferred positions in portfolio companies. The early stage investment agreements are fairly standardized. For a review of a standard preferred offering, review the Series Seed documents below: https://w...

Venture Investors typically take preferred positions in portfolio companies. The early stage investment agreements are fairly standardized. For a review of a standard preferred offering, review the Series Seed documents below: https://www.seriesseed.com/ 

HI Revi, thanks for reaching out. There are two options in Hub to email a group of people: -1. In the respective pipeline where your team members are housed click on "Send email" for a prospect that is one of your teammates, then clic...

HI Revi, thanks for reaching out. There are two options in Hub to email a group of people: -1. In the respective pipeline where your team members are housed click on "Send email" for a prospect that is one of your teammates, then click on the +CC and BCC button in order to add the rest of your team members in the CC field. Always make sure that the email is coming from you by selecting your email address in the "From" section. -2. Alternatively you can email a group of people, in this case your team members, at once by selecting up to 50 prospects at a time in the pipeline by using the checkboxes next to their names in the stages/prospects list. After selecting them / checking the boxes next to their names, a green bar at the top of the screen will appear that includes "Send Email", click on it to proceed. If things are still unclear or if you prefer me to walk you through this in person, I am happy to do so over a Zoom call. Here is my calendly: https://calendly.com/rjn-1/30min

As a manager, you need to reach out and secure updates from portfolio companies and prospective portfolio companies on a regular basis. Decile Hub has CRM tools to manage this easily. A release is currently being developed to automatical...

As a manager, you need to reach out and secure updates from portfolio companies and prospective portfolio companies on a regular basis. Decile Hub has CRM tools to manage this easily. A release is currently being developed to automatically check in on portfolio companies every quarter to get an update through a form, and the form submission by the portfolio company will automatically update data in Hub.

Question: With respect to financing documents, what does an early-stage VC need to do at the time of a an Equity Financing (aka Preferred Stock Financing), if said VC invested earlier in a typical SAFE note? A standard, unaltered Y Com...

Question: With respect to financing documents, what does an early-stage VC need to do at the time of a an Equity Financing (aka Preferred Stock Financing), if said VC invested earlier in a typical SAFE note? A standard, unaltered Y Combinator SAFE in 2023 contains language such as the following (please review variations published by Y Combinator for exact phrasing): "In connection with the automatic conversion of this Safe into shares of Standard Preferred Stock or Safe Preferred Stock, the Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing; provided, that such documents (i) are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and (ii) have customary exceptions to any drag-along applicable to the Investor, including (without limitation) limited representations, warranties, liability and indemnification obligations for the Investor." Answer: *Typically, during an Equity Financing, the Company (the portfolio company), will retain a law firm, which will be responsible for coordinating/distributing documents and requesting signatures as needed. **SAFE investors typically sign a subset of the Equity Financing documents.  Generally a VC in similar circumstances will need to: • Review the Preferred Stock Purchase Agreement and accompanying documents (with the assistance of its own counsel, which is usually recommended) to ensure its SAFE is converting correctly and as intended; • Sign the final financing documents (or subset thereof) as distributed by the portfolio company's law firm; • Receive and retain a final, fully executed set of closing documents for the Preferred Stock Financing.

As a general matter, here are some best practices in setting up a fund's LPAC: • Check the LPA or governing document that describes the LPAC appointment process and details the LPAC's particulars; • Ensure that LPAC members are people th...

As a general matter, here are some best practices in setting up a fund's LPAC: • Check the LPA or governing document that describes the LPAC appointment process and details the LPAC's particulars; • Ensure that LPAC members are people that the fund manager really trusts, as depending on the LPA, LPAC members may have quite a bit of power;  • Keep the LPAC as small as practicable, with the proviso that the LPAC should have an odd number of members to prevent any potential deadlock situations; • For smaller funds, 1 to 3 members are ideal.  *Given the SEC's recent rules, the LPAC should not be used as an Investment Committee, nor should it vote on matters regarding conflicts of interest. More information can be found here: https://govclab.com/2023/08/25/sec-private-fund-adviser-reforms/

No. Most government backed VCs massively underperform because the government's objectives are often mis-aligned with the VC (to perform really well). Also, the government's bureaucracy and processes force the GP to dedicate an enormous a...

No. Most government backed VCs massively underperform because the government's objectives are often mis-aligned with the VC (to perform really well). Also, the government's bureaucracy and processes force the GP to dedicate an enormous amount to activities that are not related to investing or providing value add to their portfolio, which further reduces performance. 

PACT links generated via Hub don’t expire. 

PACT links generated via Hub don’t expire. 

Fund managers can discuss future arrangements verbally - however they should refrain from making any promises or commitments (verbal, written, or otherwise). Particularly, fund managers should sign NOTHING - as a general matter, legal ...

Fund managers can discuss future arrangements verbally - however they should refrain from making any promises or commitments (verbal, written, or otherwise). Particularly, fund managers should sign NOTHING - as a general matter, legal agreements cannot be signed on behalf of fund entities that do not exist. This goes for any investments intended to be warehoused as well - a prospective fund manager must sign those as an individual or on behalf of a wholly-owned entity the fund manager will invest out of.

Typically, the fund and the accelerator are separate. The accelerator has it's own operational structure and generates revenue in a variety of ways, such as sponsorships etc... The fund is generally a classic 2 & 20 structure. The manage...

Typically, the fund and the accelerator are separate. The accelerator has it's own operational structure and generates revenue in a variety of ways, such as sponsorships etc... The fund is generally a classic 2 & 20 structure. The management fees for the fund can be passed down to the accelerator for additional revenue and it's not uncommon for these funds to charge 3.5% during the investment period and less during the rest of the fund life to average 2% over the 10 years.

VCs don't invest in LLCs. LLCs are pass through vehicles and issue K1s to all members, so all gains and losses are passed through to the fund, and the fund must pass them through to every LP. In addition to the MASSIVE accounting and tax...

VCs don't invest in LLCs. LLCs are pass through vehicles and issue K1s to all members, so all gains and losses are passed through to the fund, and the fund must pass them through to every LP. In addition to the MASSIVE accounting and tax headache, if a company is profitable and they don’t distribute dividends, VCs will need to report taxable income to their LPs.

Yes - however in doing so, the limited partner will generally lose their "limited" status with respect to liability, because they may wield influence over the Fund's decision-making processes. They may become liable for any actions taken...

Yes - however in doing so, the limited partner will generally lose their "limited" status with respect to liability, because they may wield influence over the Fund's decision-making processes. They may become liable for any actions taken by the General Partner of the fund that have potentially adverse implications for the Fund's limited partners.

“For the Anti Money Laundering portion of the review we are always looking for the underlying individuals. It means that if there are any entities that are owners with 25% or more interest in the LP entity, we will require the name(s) a...

“For the Anti Money Laundering portion of the review we are always looking for the underlying individuals. It means that if there are any entities that are owners with 25% or more interest in the LP entity, we will require the name(s) and date(s) of birth of the underlying individuals of that subsidiary entity/entities. In the case where there are no underlying owners with 25% or more interest in the LP entity (directly or through its subsidiaries), it will be required to review the next person who has the authority and control to be the decision-maker in the LP entity. We will need the name(s) and date(s) of birth of that individual(s).”

Yes, a Delaware LP is a pass through entity. 

Yes, a Delaware LP is a pass through entity. 

It's more of a nice to have. If LPs are requesting it, take your deck and put the major points in each slide into a section of the executive summary.

It's more of a nice to have. If LPs are requesting it, take your deck and put the major points in each slide into a section of the executive summary.

A typical return on a 20 company portfolio may have 1 to 3 venture style exits if the manager is strong. There may be another few portfolio companies that get a multiple, and the rest are either a wash or a loss.

A typical return on a 20 company portfolio may have 1 to 3 venture style exits if the manager is strong. There may be another few portfolio companies that get a multiple, and the rest are either a wash or a loss.

You can, but you will need LPAC approval. 

You can, but you will need LPAC approval. 

Don't put people in your team slide that are not confirmed in general. It is sufficient to have 1 individual on the team slide.

Don't put people in your team slide that are not confirmed in general. It is sufficient to have 1 individual on the team slide.

Generally speaking, the best setups for a prospective fund manager to warehouse deals are: • Individually (no one else involved); or • Via a 100% wholly-owned entity.  The other types of setups you are referring to generally are not opt...

Generally speaking, the best setups for a prospective fund manager to warehouse deals are: • Individually (no one else involved); or • Via a 100% wholly-owned entity.  The other types of setups you are referring to generally are not options. Complicated legal setups are not recommended, and platforms where the fund manager does not outright own the rights to an investment are not viable either. TL:DR - keep things simple. 

First read this article on Management Fees. Then read this article on fund expenses. Everything listed as Manager in the 'Who Commonly Pays?' column will come out of management fees. Finally read this article on the VC fee model. Every f...

First read this article on Management Fees. Then read this article on fund expenses. Everything listed as Manager in the 'Who Commonly Pays?' column will come out of management fees. Finally read this article on the VC fee model. Every fund is different, so your costs, especially with respect to DD may vary based on the strategy.