All Questions

An SPV is a non-blind vehicle that contains one deal. A venture fund is a blind pool, the limited partners do not know what deals are going to be invested in, that contains a diversified set of portfolio companies, usually 10 to 25. Th...

An SPV is a non-blind vehicle that contains one deal. A venture fund is a blind pool, the limited partners do not know what deals are going to be invested in, that contains a diversified set of portfolio companies, usually 10 to 25. The fees are normally much smaller for SPVs, which make then attractive to limited partners. SPVs end up being a distraction to venture capitalists looking to set up a venture capital firm, since they are not real venture funds and since the economics are small.

We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in...

We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in a bad negotiating position. If you want to offer something, offer a discount on SPVs to invest in your follow-on into portfolio companies, and you can offer this as a handshake agreement.

We strongly recommend that you do not take investments into the Management Company. The Limited Partner will own your outcomes for decades. Instead, the best practice is to take investment into the General Partner, which is converted in ...

We strongly recommend that you do not take investments into the Management Company. The Limited Partner will own your outcomes for decades. Instead, the best practice is to take investment into the General Partner, which is converted in our Stewardship Agreement below. Investors buy a Class V position to take preferred ownership of the carried interest without voting control: Password: Cohort4

Under US securities laws, certain private funds are not required to be registered or regulated as investment companies laws such as under the following exclusions: ·       Traditional 3(c)(1) Fund (no more than 100 beneficial owners) ·  ...

Under US securities laws, certain private funds are not required to be registered or regulated as investment companies laws such as under the following exclusions: ·       Traditional 3(c)(1) Fund (no more than 100 beneficial owners) ·       3(c)(7) Fund (limited to qualified purchasers) ·       3(c)(1) Qualifying Venture Capital Fund (no more than $10M from no more than 250 beneficial owners). Fund advisers are required to register with the SEC unless they are exempt from applicable registration requirements such as investment advisers who solely manage qualifying venture capital funds or solely manage private fund assets of less than $150 million. They are, however, required to make certain filings and report certain information annually to the SEC as exempt reporting advisers.

1. Before you do this, look into if there are similar issues acts like ITAR and CFIUS in the US. A lot of space companies will face this challenge because governments will try to protect a lot of the secrets because they affect national ...

1. Before you do this, look into if there are similar issues acts like ITAR and CFIUS in the US. A lot of space companies will face this challenge because governments will try to protect a lot of the secrets because they affect national security. If the 2nd country also has a form of ITAR, then this may pose a risk. 2. Pre-Seed basically includes angel, So call it Pre-Seed.

It will be extremely challenging for a first time manager to raise a $50m fund. The majority of LP archetypes do not invest in new managers. You should raise a smaller fund to prove out the thesis and to build your track record. Then, us...

It will be extremely challenging for a first time manager to raise a $50m fund. The majority of LP archetypes do not invest in new managers. You should raise a smaller fund to prove out the thesis and to build your track record. Then, use this to raise a larger fund.

Just because people are saying stuff like this, it doesn’t mean it’s good. In fact, it isn’t, especially relating to your thesis. If you are going to do a network pitch, position it around the thesis. Having 50 advisors that are on thes...

Just because people are saying stuff like this, it doesn’t mean it’s good. In fact, it isn’t, especially relating to your thesis. If you are going to do a network pitch, position it around the thesis. Having 50 advisors that are on thesis is much better then 500 ‘connections’

Minimum commitment should be $100k The ideal # of LPs is in the range of 25 - 50.

Minimum commitment should be $100k The ideal # of LPs is in the range of 25 - 50.

C-corps have certain tax implications that will not not make fund investing viable in many cases. Most funds are setup as flow-through entities such as LLCs.

C-corps have certain tax implications that will not not make fund investing viable in many cases. Most funds are setup as flow-through entities such as LLCs.

This is prohibitively expensive. You need a $25 MM fund size to justify this, and it really would only work if you had many LPs and portfolio companies in both jurisdictions. The EU is too expensive as a domicile for most new managers. ...

This is prohibitively expensive. You need a $25 MM fund size to justify this, and it really would only work if you had many LPs and portfolio companies in both jurisdictions. The EU is too expensive as a domicile for most new managers. The minimum fund size is $15 MM to $25 MM to domicile in the EU. VC Lab is exploring ways for EU funds to domicile in the US, as well as setting up a lower cost alternative domicile in the EU.

Hard NO.  See this article for more assistance: https://govclab.com/2022/06/28/general-soliciation/

Hard NO.  See this article for more assistance: https://govclab.com/2022/06/28/general-soliciation/

Possibly - conflicts of interest are situation-specific, so it would be best to dig into the details and consult an experienced fund formation specialist attorney as needed. If, for example, XYZ company has a venture fund and the fund m...

Possibly - conflicts of interest are situation-specific, so it would be best to dig into the details and consult an experienced fund formation specialist attorney as needed. If, for example, XYZ company has a venture fund and the fund manager's friend is involved in it, a conflict of interest would almost definitely arise. Additionally, if XYZ company is working on competing technology to the fund's portfolio companies, that could also be a conflict.

This is the industry standard, as it allows you to memorialize why you do a deal. Deals often take many years to create liquidity, and it is important to be able to analyze your decision making process many years in the future. They are...

This is the industry standard, as it allows you to memorialize why you do a deal. Deals often take many years to create liquidity, and it is important to be able to analyze your decision making process many years in the future. They are not required. However, Limited Parrners do expect them and often ask to see them.

The General Partners jointly contribute 1%, splitting portions of the 1% between them according to an agreement. This agreement is usually based on the ownership of the General Partnership. Technically, the General Partnership is an enti...

The General Partners jointly contribute 1%, splitting portions of the 1% between them according to an agreement. This agreement is usually based on the ownership of the General Partnership. Technically, the General Partnership is an entity, and General Partners are owners of the entity.

Absolutely not. You can not incentivize Venture Partners with commissions because that would be in violation with numerous broker dealer laws. 

Absolutely not. You can not incentivize Venture Partners with commissions because that would be in violation with numerous broker dealer laws. 

It's not legal in most jurisdictions to compensate individuals based on fundraising goals due to various broker-dealer regulations. 

It's not legal in most jurisdictions to compensate individuals based on fundraising goals due to various broker-dealer regulations. 

Hurdle rates and net return multiple are very uncommon in Venture Capital funds. 

Hurdle rates and net return multiple are very uncommon in Venture Capital funds. 

Yes, that’s what we mean.

Yes, that’s what we mean.

Everyone has to be on the same schedule.

Everyone has to be on the same schedule.

One of the most effective activate weak connectors is to have them make a connection to another connector. 

One of the most effective activate weak connectors is to have them make a connection to another connector.