All Questions

Enduring VC Firms work with specialized VC tax firms to produce documentation like K-1s for each of their LPs. It's very important that there is a separation between the tax firm and the fund administrator to reduce potential conflicts o...

Enduring VC Firms work with specialized VC tax firms to produce documentation like K-1s for each of their LPs. It's very important that there is a separation between the tax firm and the fund administrator to reduce potential conflicts or ethical dilemmas that may come up during this process. Once the K-1s are prepared by the tax firm they get shared with the Decile Partners tax group for review. This way, there is a check and balance prior to distribution to LPs. Finally, the tax documents are added in the LP's portal by uploading them in the appropriate Decile Pro Folders in the Files section in Hub. The LP can the download the K1s and various reports at decilepro.com.  

There is currently no feature to set up a custom agreement and have it electronically signed via Hub (from the customer/user side) - however we are currently exploring this kind of capability. A third-party electronic signature solution ...

There is currently no feature to set up a custom agreement and have it electronically signed via Hub (from the customer/user side) - however we are currently exploring this kind of capability. A third-party electronic signature solution is probably easiest for now. 

You will need to work with your law firm and fund admin service providers to attain those policies. That being said, VC Lab has developed a valuation policy template for the community. 

You will need to work with your law firm and fund admin service providers to attain those policies. That being said, VC Lab has developed a valuation policy template for the community. 

Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.

Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.

Generally speaking, funds do not acquire other funds, especially across different countries/jurisdictions.  This is not to say it never happens, but it is fraught with jurisdictional, regulatory and legal hurdles. A company acquiring an...

Generally speaking, funds do not acquire other funds, especially across different countries/jurisdictions.  This is not to say it never happens, but it is fraught with jurisdictional, regulatory and legal hurdles. A company acquiring another company in another jurisdiction is already complicated enough - a fund acquiring a fund in like fashion would likely be an order of magnitude more complex (if possible). For one example of complexity, any LPs in the fund being acquired would presumably (probably rightfully) consider a proposed acquisition to be a material event. It is likely that per the terms of the LPA, each LP must consent and be given the opportunity to withdraw from the fund altogether, depending on the specific circumstances. We recommend discussing the feasibility of such a proposal with experienced counsel in both jurisdictions, should you have any further questions - note that this would probably require the efforts of speveral 

Your fund size should be the minimum target. So in this case $10mm is the minimum target and you can oversubscribe it to a hard cap of say $15 or $20m. The first thing that you should do is to see the conversation through with the LP and...

Your fund size should be the minimum target. So in this case $10mm is the minimum target and you can oversubscribe it to a hard cap of say $15 or $20m. The first thing that you should do is to see the conversation through with the LP and get them to a close. There is a long way to go between a verbal yes (10% chance of closing) and a wire.  Until then, it's not worth it for you to solve this issue. For example, it's possible that the LPs may want to invest under special unfavorable conditions that you should not entertain. For example, an LP may require that you invest their money in a certain geography or type of company. In this case you would need to refuse this LP because the ask it's not viable operationally and has major ethics issues.   Now let's say they do decide to sign and commit. In this case, let them in for a smaller ticket so that they don't own more then 25% of the fund. Then, as you oversubscribe the fund, they can increase their position.

As long as all of the QSBS requirements are met, then carried interest would qualify for it.

As long as all of the QSBS requirements are met, then carried interest would qualify for it.

The financial statement reports do not include a Cash Flow Statement. With that being said, a Cash Flow Statement can be produced within Hub and exported if needed.

The financial statement reports do not include a Cash Flow Statement. With that being said, a Cash Flow Statement can be produced within Hub and exported if needed.

The difference would only come if there were offsetting fees that would reduce the base management fees. The base management fees would be calculated from what is stated within an LPA.

The difference would only come if there were offsetting fees that would reduce the base management fees. The base management fees would be calculated from what is stated within an LPA.

A capital call is a request made by a venture capital fund to its limited partners (LPs) to contribute a portion of their committed capital to the fund. This is typically done when the fund needs additional funds to make investments or t...

A capital call is a request made by a venture capital fund to its limited partners (LPs) to contribute a portion of their committed capital to the fund. This is typically done when the fund needs additional funds to make investments or to cover its certain ongoing expenses. A venture capital fund should not commit to a set schedule for capital calls, however, and should call capital only when needed - no significant amount of investors' capital should sit in the venture capital fund's bank account either.  LPs should be aware that they are expected to contribute their committed capital upon request, and failure to do so may have consequences as outlined in the LPA.

Venture Capitalists engage in a variety of conscious and unconscious unethical behavior with different stakeholders. Some example of unethical behavior commonly seen in venture capital include: Founders / Deals • Disrespecting Founders ...

Venture Capitalists engage in a variety of conscious and unconscious unethical behavior with different stakeholders. Some example of unethical behavior commonly seen in venture capital include: Founders / Deals • Disrespecting Founders • Offering Below Market Financing Terms • Hidden Economic Terms in Template Agreements • Switching Terms in Diligence • Not Marking to Market Limited Partners • Providing Overly Optimistic Return Analysis • Using Pre-called Capital for Investments • Offering Special Economics or Co-investment to Specific LPs • Providing Advantageous Information Rights to Specific LPs • Using the LPAC as a Investment Committee • Investing Personally in Deals not Cleared with the Fund Team Members • Removing Team Members to Consolidate Gains • Engaging in Sexual Misconduct • Having Double Standards • Not Promoting Talented Team Members

When a capital call is completed, an investor's total capital commitment does not change, but the portion of that investor's committed capital that has been paid into the fund has increased. The fund's size (as described on the LPA) does...

When a capital call is completed, an investor's total capital commitment does not change, but the portion of that investor's committed capital that has been paid into the fund has increased. The fund's size (as described on the LPA) does not necessarily limit the maximum total capital investors commit - this is typically referred to as over-subscribing.  Note that all LPs must be on the same capital call schedule and the fund cannot call and deploy 100% of the capital from a first close before raising the rest of the fund. 

Capital calls are not typically treated as taxable events. They represent the contribution of committed capital from limited partners (LPs) to the fund, which is then used for investments or to cover ongoing expenses. This is a transfer ...

Capital calls are not typically treated as taxable events. They represent the contribution of committed capital from limited partners (LPs) to the fund, which is then used for investments or to cover ongoing expenses. This is a transfer of capital rather than income or profit, so it does not generally trigger a tax liability. However, any gains or income generated from the use of that capital in investments could potentially be subject to tax. Always consult with a tax professional for specific advice.

Venture Capital funds typically do not specify whether a capital call is for investment or management fees when requesting funds from Limited Partners (LPs). The capital call is generally used to cover both investments and ongoing expens...

Venture Capital funds typically do not specify whether a capital call is for investment or management fees when requesting funds from Limited Partners (LPs). The capital call is generally used to cover both investments and ongoing expenses such as management fees, legal and accounting fees, and other operational costs. The specific allocation of the funds is determined by the fund manager as per the terms of the Limited Partnership Agreement (LPA).

The process to apply the Valuation Policy to a portfolio of 20 startups each quarter would involve several steps.  First, you would need to gather the latest financial and operational data from each startup. This could include recent fi...

The process to apply the Valuation Policy to a portfolio of 20 startups each quarter would involve several steps.  First, you would need to gather the latest financial and operational data from each startup. This could include recent financing rounds, revenue figures, and other key performance indicators.  Next, you would apply the valuation methodology outlined in the Valuation Policy to each startup. This could involve using market comparables, discounted cash flow analysis, or other valuation techniques.  After valuing each startup, you would update the portfolio's overall valuation. This process would be repeated each quarter to ensure the portfolio's valuation remains accurate and up-to-date.

The frequency of capital calls is generally determined by the needs of the fund (for deployment, fund expenses, etc.) and the discretion of the management. Most funds call 20% or 25% of committed capital upon the first close, after which...

The frequency of capital calls is generally determined by the needs of the fund (for deployment, fund expenses, etc.) and the discretion of the management. Most funds call 20% or 25% of committed capital upon the first close, after which it normally takes 12 to 18 months to close the remainder of the fund. During this period, funds typically do not call additional capital. When the fund is fully closed but within the active investment period, managers generally make capital calls as needed.  Capital calls are not normally done per deal or on a set percentage each month or quarter. 

Markdowns for a struggling portfolio company that hasn't raised funds in 3 years are determined by the valuation policy adopted by the fund. The valuation policy should provide guidelines on how to value such investments. This could invo...

Markdowns for a struggling portfolio company that hasn't raised funds in 3 years are determined by the valuation policy adopted by the fund. The valuation policy should provide guidelines on how to value such investments. This could involve considering the company's financial performance, market conditions, or other relevant factors. If the company's performance has deteriorated or if it's facing significant challenges, a markdown may be appropriate.

Yes - cost and fair market value can differ. Cost in this context refers to the amount initially paid for an investment, while fair market value (commonly referred to as FMV) is the current market value of that investment. Changes in mar...

Yes - cost and fair market value can differ. Cost in this context refers to the amount initially paid for an investment, while fair market value (commonly referred to as FMV) is the current market value of that investment. Changes in market conditions, performance of the investment, financings, and other factors can cause the fair market value to be higher or lower than the initial cost paid. 

At a minimum, portfolio companies should be reevaluated on a quarterly cadence. This ensures the most up to date metrics are being reported to Limited Partners.

At a minimum, portfolio companies should be reevaluated on a quarterly cadence. This ensures the most up to date metrics are being reported to Limited Partners.

Typically, VC Firms will determine a company's initial FMV as the cost in which it was purchase as the purchase price is usually done at the company's latest FMV.

Typically, VC Firms will determine a company's initial FMV as the cost in which it was purchase as the purchase price is usually done at the company's latest FMV.