All Questions

You can use whatever tool you want for this task. 

You can use whatever tool you want for this task. 

A large percentage of pre-seed and seed investments are made with YC SAFE notes, in those cases the YC pro rata side letter is the accepted baseline, which provides a right to purchase shares in the following equity (conversion) round at...

A large percentage of pre-seed and seed investments are made with YC SAFE notes, in those cases the YC pro rata side letter is the accepted baseline, which provides a right to purchase shares in the following equity (conversion) round at the ratio of the SAFE investment to company capitalization. The YC templates are at https://www.ycombinator.com/documents For priced rounds (stock purchase) in the US, NVCA model documents are an accepted baseline https://nvca.org/model-legal-documents/ Regardless of investment vehicle, it is important for VCs to be fair in negotiation and especially not place demands on founders or create terms that could prove toxic to future fundraising efforts.

As a general rule of thumb, fund managers avoid domiciling in the EU. Currently, the EU has a complex web of expensive and inefficient regulations that need to be adhered to, burdening fund managers with audits, fees, high taxes, regulat...

As a general rule of thumb, fund managers avoid domiciling in the EU. Currently, the EU has a complex web of expensive and inefficient regulations that need to be adhered to, burdening fund managers with audits, fees, high taxes, regulatory requirements, general solicitation penalties, and ESG rules, like this. Most managers choose Delaware as a domicile to limit the regulatory burden, and these regulations only apply to foreign funds in certain circumstances, which can be easily avoided by following the best practices for general solicitation.

No, they are not required. Also, it's absolutely critical that new and emerging managers do not engage with any vendors including lawyers until they have a minimum of 10%+ of their fund hard circled in PACTs. Finally, institutional LPs r...

No, they are not required. Also, it's absolutely critical that new and emerging managers do not engage with any vendors including lawyers until they have a minimum of 10%+ of their fund hard circled in PACTs. Finally, institutional LPs rarely invest in new or emerging managers. 

According to VC Lab's most recent nextgen manager report, 63% of new managers are over the age of 40, whereas only 5% are under the age of 30.

According to VC Lab's most recent nextgen manager report, 63% of new managers are over the age of 40, whereas only 5% are under the age of 30.

This is highly depended on the fund model and strategy. There is very big difference between pre-seed and seed. All factors considered here are some very high level guidelines: Pre-Seed:  ~50 companies Seed:         ~25 companies

This is highly depended on the fund model and strategy. There is very big difference between pre-seed and seed. All factors considered here are some very high level guidelines: Pre-Seed:  ~50 companies Seed:         ~25 companies

Limited Partners are 'limited' on purpose. The limitations protect the LP, GP and the fund. If a limited partner were to make an investment decision for the fund, they would loose their limited partner protections.  To answer your quest...

Limited Partners are 'limited' on purpose. The limitations protect the LP, GP and the fund. If a limited partner were to make an investment decision for the fund, they would loose their limited partner protections.  To answer your question directly, you can say something like this in your own words: " Thank you so much for suggesting this investment. We will review it via our process." Then, if the if the investment is way off thesis and does not fit the return profile for the fund, just pass on the investment as normal. 

Decile AI - "Yes, the fund in a venture studio can be used to test out ideas. This process involves deploying capital for market feedback before identifying the best ideas or models for larger investments. This approach is different from...

Decile AI - "Yes, the fund in a venture studio can be used to test out ideas. This process involves deploying capital for market feedback before identifying the best ideas or models for larger investments. This approach is different from a traditional VC fund, which typically invests in startups without this preliminary testing phase."

Assume that everything you hear in the media about Venture Capital is wrong. Journalists are working off bad data and the opinions of a few old VCs that are becoming irrelevant. VC Lab accelerator participants had the best fundraising mo...

Assume that everything you hear in the media about Venture Capital is wrong. Journalists are working off bad data and the opinions of a few old VCs that are becoming irrelevant. VC Lab accelerator participants had the best fundraising month in our history in June 2023.  As far as what LPs are looking for, that's an absolutely impossible question to answer because it really depends on the thesis of the VC and they archetype of the LP.

Great question, and I think the answer can vary depending on the stage at which the company is at. In other words, the metrics for a pre-seed/seed stage company will differ vastly from a more mature, Series C/D company. I think at the ea...

Great question, and I think the answer can vary depending on the stage at which the company is at. In other words, the metrics for a pre-seed/seed stage company will differ vastly from a more mature, Series C/D company. I think at the early stage, there should likely be an emphasis on product market fit, execution velocity, the quality of the team, etc. At the later stage once revenue has been established, one can examine things like company burn rates, customer acquisition costs, revenue per employee, and conduct a more sophisticated analysis on revenue as it relates to different product streams. I hope this helps! 

Generally speaking, no - Fund Managers do not need to file an 83(b) election with respect to acquiring Shares in the ManCo or GP entity (via the ManCo). An 83(b) election is only required when acquiring Shares that are subject to vesting...

Generally speaking, no - Fund Managers do not need to file an 83(b) election with respect to acquiring Shares in the ManCo or GP entity (via the ManCo). An 83(b) election is only required when acquiring Shares that are subject to vesting over time. It is very unusual for Fund Managers to subject their Shares to vesting. 

There are two types of anti-dilution protections for investors: full-ratchet and weighted average. They sometimes get used in priced rounds and are not typically found in Convertible Notes or SAFEs. These type of protections are not foun...

There are two types of anti-dilution protections for investors: full-ratchet and weighted average. They sometimes get used in priced rounds and are not typically found in Convertible Notes or SAFEs. These type of protections are not founder friendly. 

Sometimes, startups issue warrant coverage to sweeten the deal by providing investors with the opportunity to gain additional shares in the future at a lower price. Please note that most of the things you will 'hear' in the world of ven...

Sometimes, startups issue warrant coverage to sweeten the deal by providing investors with the opportunity to gain additional shares in the future at a lower price. Please note that most of the things you will 'hear' in the world of venture capital outside of Decile Base are wrong because there is little transparency in the industry.

It is critical for Managing Partners (founders of venture capital firms) to partner with people that they know extremely well and that they have had an extensive long-term working relationship. Partner breakups in VC firms have dire cons...

It is critical for Managing Partners (founders of venture capital firms) to partner with people that they know extremely well and that they have had an extensive long-term working relationship. Partner breakups in VC firms have dire consequences given that these firms are 15 - 20 year commitments at a minimum. Therefore, if the choice is between being a solo GP or partnering with someone who you don't know extremely well, the best choice is often to be solo.

Venture Capital is a RISK asset class and a very optimistic style of investing. The objective of venture capitalists is to fund category defining startups with the potential to return the entire fund or more given that on average the maj...

Venture Capital is a RISK asset class and a very optimistic style of investing. The objective of venture capitalists is to fund category defining startups with the potential to return the entire fund or more given that on average the majority of the portfolio companies will fail. A VC does 'mitigate some risk' by investing in a portfolio of companies. However, the expectation is that 1-3 of the companies will drive the majority of the returns in the portfolio. 

Venture Capital is a RISK asset class and a very optimistic style of investing. The objective of venture capitalists is to fund category defining startups, and by definition, it's really difficult to spot these companies if one is bearis...

Venture Capital is a RISK asset class and a very optimistic style of investing. The objective of venture capitalists is to fund category defining startups, and by definition, it's really difficult to spot these companies if one is bearish on the future prospects of the market. In other-words, venture capital is the R&D finance vehicle for the innovation of the future.  How to build a VC fund model: https://govclab.com/2022/05/05/how-to-build-a-vc-fund-model/

There are other structures, but they are not commonly accepted. As a result, GPs that attempt to setup non-standard structures get significant resistance from LPs and experience severe fundraising challenges. Read this: https://govclab....

There are other structures, but they are not commonly accepted. As a result, GPs that attempt to setup non-standard structures get significant resistance from LPs and experience severe fundraising challenges. Read this: https://govclab.com/2023/05/26/vc-management-fees

The LPA specifies the conditions for what will take place at the end of the fund life. The options are: extend the fund life by 1 or 2 years, distribute the remaining interest to LPs, or liquidate the fund via a secondary transaction. Ty...

The LPA specifies the conditions for what will take place at the end of the fund life. The options are: extend the fund life by 1 or 2 years, distribute the remaining interest to LPs, or liquidate the fund via a secondary transaction. Typically, when extending the fund, GPs don’t charge management fees.

Here are some potential causes of LP concerns during diligencing on GPs: • Size of fund too large for new manager • Large # of deals per person • Poor updates  • Small network • Bad references from portfolio founders  • Bad references fr...

Here are some potential causes of LP concerns during diligencing on GPs: • Size of fund too large for new manager • Large # of deals per person • Poor updates  • Small network • Bad references from portfolio founders  • Bad references from co-investors  • Unfamiliar sector • GP is unable to openly discuss previous investment mistakes • GPs track record doesn't match the thesis

Companies in certain critical technologies or other types of industries or geographical proximity to national security matters (i.e., airports, submarine bases) may require investors to represent that the investor is not owned or control...

Companies in certain critical technologies or other types of industries or geographical proximity to national security matters (i.e., airports, submarine bases) may require investors to represent that the investor is not owned or controlled by foreign persons. That’s because if a foreign person obtains a certain level of control over the company, then the investment transaction will require review by CFIUS. Here’s the traditional representation that companies concerned with Defense Production Act matters will request from their investors: CFIUS Foreign Person Status. The Purchaser is not a “foreign person” or a “foreign entity,” as defined in Section 721 of the Defense Production Act of 1950, as amended, including all implementing regulations thereof (the “DPA”). The Purchaser is not controlled by a “foreign person,” as defined in the DPA. The Purchaser does not permit any foreign person affiliated with the Purchaser, whether affiliated as a limited partner or otherwise, to obtain through the Purchaser any of the following with respect to the Company: (i) access to any “material nonpublic technical information” (as defined in the DPA) in the possession of the Company; (ii) membership or observer rights on the Board of Directors or equivalent governing body of the Company or the right to nominate an individual to a position on the Board of Directors or equivalent governing body of the Company; (iii) any involvement, other than through the voting of shares, in the substantive decision-making of the Company regarding (x) the use, development, acquisition, or release of any “critical technology” (as defined in the DPA), (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Company, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA); or (iv) “control” of the Company (as defined in the DPA).]