All Questions

Fund managers can warehouse an investment for the fund in their personal capacity or through an entity they wholly own and control, prior to the fund's initial closing. 

Fund managers can warehouse an investment for the fund in their personal capacity or through an entity they wholly own and control, prior to the fund's initial closing. 

Warehoused deals are a great way to have an immediate markup and provide incentive for LPs to invest. You will need to set up a consistent rule for transferring warehoused deals - like "all seed deals in the fund thesis made in the last ...

Warehoused deals are a great way to have an immediate markup and provide incentive for LPs to invest. You will need to set up a consistent rule for transferring warehoused deals - like "all seed deals in the fund thesis made in the last 12 months", you can't pick and choose deals to transfer in.

The Cornerstone Agreement provides that the general partner is prohibited in engaging in conduct which could constitute a conflict of interest without Approval.  See the Conflict of Interest and Successor Fund provisions which prohibit a...

The Cornerstone Agreement provides that the general partner is prohibited in engaging in conduct which could constitute a conflict of interest without Approval.  See the Conflict of Interest and Successor Fund provisions which prohibit activities that could potentially compete with the fund.

The recycling provision does not refer to the Fund's target size.  The recycling language in the Cornerstone LPA template means that: • After a limited partner receives distributions equal to its total capital contributions (not commitm...

The recycling provision does not refer to the Fund's target size.  The recycling language in the Cornerstone LPA template means that: • After a limited partner receives distributions equal to its total capital contributions (not commitment) to the Fund; • The limited partner's "Unused Capital Commitment" (amount available to be called and deployed) will be increased by an amount up to the Recycled Amount.  For example: • A limited partner commits a total of $X to the Fund, which has Y% as the Recycled Amount; • Total capital called is 50% after a few years; • The limited partner's Unused Capital Commitment is now 50%; • There is an exit/distribution that returns 100% of the limited partner's capital contribution; • The limited partner's Unused Capital Commitment can be increased by up to Y% of the total commitment. 

The Recycle Amount percentage, as set forth in the Cornerstone LPA, will be the upper limit of what is able to be recycled and deployed - however a fund manager is not required to deploy up to that exact Recycled Amount percentage (and i...

The Recycle Amount percentage, as set forth in the Cornerstone LPA, will be the upper limit of what is able to be recycled and deployed - however a fund manager is not required to deploy up to that exact Recycled Amount percentage (and in fact this would be very unusual). 

It may be possible to lead SPVs outside of a fund manager's Fund - however it is generally not recommended.  Fund managers owe fiduciary responsibility (and usually a stated time commitment) to the Fund and its limited partners - so any...

It may be possible to lead SPVs outside of a fund manager's Fund - however it is generally not recommended.  Fund managers owe fiduciary responsibility (and usually a stated time commitment) to the Fund and its limited partners - so any activities that might come into conflict with these obligations could potentially become a conflict of interest.  Even if the SPV is outside of the Fund's thesis, best practice is to disclose any such intended investments up front to limited partners and to clear each such SPV by a limited partner advisory committee. Managing these may be time consuming and not worth the additional effort - limited partners may also believe there is a misalignment of interests. 

Class A votes and votes by members of the Limited Partner Advisory Committee are entirely unrelated concepts. Generally speaking (when discussing Decile Group's standard structure and templates): • Class A is what is issued to the Manage...

Class A votes and votes by members of the Limited Partner Advisory Committee are entirely unrelated concepts. Generally speaking (when discussing Decile Group's standard structure and templates): • Class A is what is issued to the Management Company (the majority), and Venture Partners from the General Partner entity - these Class A Shares vote on certain matters as defined in the General Partner entity's Stewardship Agreement; • The Limited Partner Advisory Committee exists at the Fund level only and is not related to the General Partner entity - each member receives one vote. 

Yes. The goal is to establish a multi-fund relationship, where the carry declines from 5%, 4% and then 3% for each subsequent fund.

Yes. The goal is to establish a multi-fund relationship, where the carry declines from 5%, 4% and then 3% for each subsequent fund.

Venture capital funds are typically formed as limited partnerships which have general partners and limited partners. In a  limited partnership, the general partner faces unlimited liability while the liability of the limited partners is ...

Venture capital funds are typically formed as limited partnerships which have general partners and limited partners. In a  limited partnership, the general partner faces unlimited liability while the liability of the limited partners is limited to the amount of their investment.  For example, if the fund is has debts or is sued or incurs liabilities, the limited partners will not be subject to paying for the fund's liabilities while the general partner will face exposure to such debts and liabilities.

Indemnification provides certain protection for a party by contract.  For example, in the Cornerstone, the General Partner is indemnified by the Fund for its services in connection with the Fund provided that the General Partner acted in...

Indemnification provides certain protection for a party by contract.  For example, in the Cornerstone, the General Partner is indemnified by the Fund for its services in connection with the Fund provided that the General Partner acted in good faith and in the best interests of the Fund and such actions did not constitute Malfeasance.  The indemnification means that the fund will pay for damages as well as legal and other expenses suffered by the general partner in connection with the fund.

This does not have to be memorialized in any agreement. You can just offer the opportunity as they come up with an SPV. If an investor asks, you can offer a side letter for this right.

This does not have to be memorialized in any agreement. You can just offer the opportunity as they come up with an SPV. If an investor asks, you can offer a side letter for this right.

Generally speaking, fund expenses will be allocated from the capital called from the limited partners (there is no separate call in any way) - please read this for more information: https://govclab.com/2022/11/07/managing-fund-expenses...

Generally speaking, fund expenses will be allocated from the capital called from the limited partners (there is no separate call in any way) - please read this for more information: https://govclab.com/2022/11/07/managing-fund-expenses-for-venture-capitalists/

Management Fees are not related to the GP investment nor any Carried Interest paid to the GP.

Management Fees are not related to the GP investment nor any Carried Interest paid to the GP.

Adeo: The Organizational Fees are for setup and have a cap, and there annual Fund Expenses that are not capped right now. I am speaking to the lawyers about a cap.

Adeo: The Organizational Fees are for setup and have a cap, and there annual Fund Expenses that are not capped right now. I am speaking to the lawyers about a cap.

With respect to legal certification of investments in Psychedelics being fully legal is not realistic. First, you are in a grey area. Second, any law firm would charge A LOT of money to certify this, as they have liability. Third, it's k...

With respect to legal certification of investments in Psychedelics being fully legal is not realistic. First, you are in a grey area. Second, any law firm would charge A LOT of money to certify this, as they have liability. Third, it's kind of a ridiculous request given the nature of the fund. Laws change, so something legal now could be illegal tomorrow and vice versa.

This is driven by investment decisions, not by contractual language. I would not recommend including this unless explicitly asked.

This is driven by investment decisions, not by contractual language. I would not recommend including this unless explicitly asked.

It would be extremely unusual for a fund to provide buy-back or redemption provisions in an investment agreement.

It would be extremely unusual for a fund to provide buy-back or redemption provisions in an investment agreement.

This really depends on how many deals that you are going to be doing per year. If you assume 8 deals per year with $5K to $10K per deal, depending on complexity, plus random other needs, then you could be at $50K to $100K per year.

This really depends on how many deals that you are going to be doing per year. If you assume 8 deals per year with $5K to $10K per deal, depending on complexity, plus random other needs, then you could be at $50K to $100K per year.

Key man provisions are typical for fund that rely on the skill and expertise of particular key individuals.  The Cornerstone provides certain protections for investors relating to the key individuals.   For example, if all Key Individual...

Key man provisions are typical for fund that rely on the skill and expertise of particular key individuals.  The Cornerstone provides certain protections for investors relating to the key individuals.   For example, if all Key Individuals are Incapacitated, the Fund automatically enters Limited Operations Mode.

GPs will often raise the minimum LP ticket in subsequent closings. Therefore, one of the main benefits to join a 1st close is the lower minimum check size.

GPs will often raise the minimum LP ticket in subsequent closings. Therefore, one of the main benefits to join a 1st close is the lower minimum check size.