All Questions

Generally, Limited Partners prefer if you lead rounds, as this work justifies the management fees and carry.

Generally, Limited Partners prefer if you lead rounds, as this work justifies the management fees and carry.

Yes. These simplified overview documents take a few iterations to get right. Here is a template: https://fndri.com/383hpyP

Yes. These simplified overview documents take a few iterations to get right. Here is a template: https://fndri.com/383hpyP

For any fund at $15 MM and under, the fees are not large enough for the General Partner or Partners to make a living. As a result, it is expected that the General Partners are either (a) not full time or (b) working on a second fund. In ...

For any fund at $15 MM and under, the fees are not large enough for the General Partner or Partners to make a living. As a result, it is expected that the General Partners are either (a) not full time or (b) working on a second fund. In addition, some Limited Partners may not ask the GP to make a capital contribution to the fund in the smaller sizes. Limited Partners make investments into part-time managers all of the time. In such cases, it is very important for value add and secret sauce to be world-class.

It really depends on the stage of the startup. There are number of AML providers, including Plaid and Sumsub. That being said, many of these solutions are cost prohibitive for pre-seed stage startups.

It really depends on the stage of the startup. There are number of AML providers, including Plaid and Sumsub. That being said, many of these solutions are cost prohibitive for pre-seed stage startups.

I recommend that you don’t sign term sheets (binding or non-binding) unless you are confident that you are going to wire. It creates a very bad dynamic between you, and the entrepreneur (who may have an unrealistic expectation here also)...

I recommend that you don’t sign term sheets (binding or non-binding) unless you are confident that you are going to wire. It creates a very bad dynamic between you, and the entrepreneur (who may have an unrealistic expectation here also), and if the deal does not happen you may have reputation risk which is not good for your brand. If you hold yourself to the highest ethical standard, you will win in the long run. :muscle:

You will send the fund overview to LPs. Think of it like an executive summary.

You will send the fund overview to LPs. Think of it like an executive summary.

The PACT it’s a non-binding LOI. It should be in the domicile of the fund.

The PACT it’s a non-binding LOI. It should be in the domicile of the fund.

No, you don’t want to sign stuff with advisors until you are closing.  There should be a confidentiality provision in the agreement you sign with an advisor.

No, you don’t want to sign stuff with advisors until you are closing.  There should be a confidentiality provision in the agreement you sign with an advisor.

The situation described is most likely a conflict of interest - but this doesn't guarantee it can't be done. Conflicts of interest are generally disclosed in a Fund's Limited Partner Agreement - and having any roles in other funds almost...

The situation described is most likely a conflict of interest - but this doesn't guarantee it can't be done. Conflicts of interest are generally disclosed in a Fund's Limited Partner Agreement - and having any roles in other funds almost certainly fits. In such situations, there will need to be an evaluation of potential outcomes of any conflicts even with disclosure in order to craft the proper language - we recommend consulting with an experienced fund formation specialist attorney for assistance. 

If you can show that you helped the companies increase their value by 3x in a short period of time, that is valuable track record. However, it is not as valuable as any investing track record.

If you can show that you helped the companies increase their value by 3x in a short period of time, that is valuable track record. However, it is not as valuable as any investing track record.

There are "blue sky laws" in the US regarding the number of Accredited Investors in any private investment vehicle that is not registered with the SEC. SEC registration is not realistic for funds. So, you wil need to raise only from Accr...

There are "blue sky laws" in the US regarding the number of Accredited Investors in any private investment vehicle that is not registered with the SEC. SEC registration is not realistic for funds. So, you wil need to raise only from Accredited Investors and have a limit of 99 Accredited Investors investing in your fund.

You need to have your own Deal Pathways that generate high quality dealflow that are unique to you and to your VC firm. Then, you need to test and refine your Deal Pathways to help you find Rockstars. You need to be reviewing a couple v...

You need to have your own Deal Pathways that generate high quality dealflow that are unique to you and to your VC firm. Then, you need to test and refine your Deal Pathways to help you find Rockstars. You need to be reviewing a couple very high quality deals per week to find one that will stand out with LPs. The difficulty level closing your fund depends on the dealflow that you have. If you have two or three exceptional companies in your Deal Warehouse, this will make closing easier. Sharing what gets someone unique dealflow in biotech won't really help someone with SaaS or FinTech.

Don’t promise anything. This is a high risk asset class. Instead, you should keep it super high level and say something like: ‘it’s not uncommon for venture funds to target a 3-4x return in a medium scenario and 8x+ in a high scenario’

Don’t promise anything. This is a high risk asset class. Instead, you should keep it super high level and say something like: ‘it’s not uncommon for venture funds to target a 3-4x return in a medium scenario and 8x+ in a high scenario’

It doesn’t affect them at all, and shouldn’t be a problem. LPs are in the LP entity, VPs are in the GP. You should mention this as positive news in your updates and that it will help them get a better return.

It doesn’t affect them at all, and shouldn’t be a problem. LPs are in the LP entity, VPs are in the GP. You should mention this as positive news in your updates and that it will help them get a better return.

Any funds selling to U.S. investors are required to comply with U.S. securities laws including requirements to register with the SEC and the applicable exemptions.  You can request an intro to a legal advisor directly from your VC lab re...

Any funds selling to U.S. investors are required to comply with U.S. securities laws including requirements to register with the SEC and the applicable exemptions.  You can request an intro to a legal advisor directly from your VC lab representative.

They will likely react negatively. It’s not worth it.

They will likely react negatively. It’s not worth it.

You can put advisors in your deck but not their carry percentage

You can put advisors in your deck but not their carry percentage

This depends on whatever process you want and whatever your LPA says. Most new managers make all of the investment decisions unless there is a conflict of interest, and then an LPAC (Limited Partner Advisor Committee) needs to approve. A...

This depends on whatever process you want and whatever your LPA says. Most new managers make all of the investment decisions unless there is a conflict of interest, and then an LPAC (Limited Partner Advisor Committee) needs to approve. Again, this is dependent on the LPA. Read the Cornerstone LPA if you are interested in learning more.

It's where you disclose certain rules related to conflicts or other matters. Here are some example fund rules:  • GPs must exclusively invest from the fund and are not allowed to Angel invest  • All investments go to IC etc…

It's where you disclose certain rules related to conflicts or other matters. Here are some example fund rules:  • GPs must exclusively invest from the fund and are not allowed to Angel invest  • All investments go to IC etc…