All Questions

Yes, investing via a SAFE (Simple Agreement for Future Equity) means that the investment won't have a set valuation until a future priced round - there is also no share price set during a seed round comprised of SAFEs.  The valuation (a...

Yes, investing via a SAFE (Simple Agreement for Future Equity) means that the investment won't have a set valuation until a future priced round - there is also no share price set during a seed round comprised of SAFEs.  The valuation (and thus price per share) is essentially deferred until more information is available, typically at the time of a preferred stock financing. The SAFE then converts into equity, usually preferred stock, at the predetermined terms, which often include a valuation cap or discount rate. 

What an investor can ask in terms of a percentage of equity or an investment amount depends nearly entirely on variables, so it is impossible to generalize. Some factors to consider for startup: • Geography (US, LatAm, etc.) • Market (B...

What an investor can ask in terms of a percentage of equity or an investment amount depends nearly entirely on variables, so it is impossible to generalize. Some factors to consider for startup: • Geography (US, LatAm, etc.) • Market (B2B, B2C, Enterprise, etc.) • Sector (Deeptech, Agritech, AI, etc.) • Stage (seed, Series A, etc.) • Size and type of financing round • Runway (cash in bank) Some factors to consider for investor: • Name Brand • Investment strategy/stage • Typical check size • Value-add beyond $$$ Just to contrast, emerging managers of small venture capital funds (say $5M total) may be able to invest $100K into early pre-seed type deals, but may not have leverage to get anything in addition. If we're talking about Sequoia Capital, then they might invest millions at a later stage, get on the startup's board of directors, etc.  Regardless, it's important for founders to maintain control of the company as long as possible to avoid financing risk and optimize for the best outcome - so percentages are often highly negotiated. Founders should take care to model the capital journey, as there are a number of models available and many variables can affect them as the startup gets built. 

Funds generally call capital from limited partners (LPs) in several tranches in order to optimize fundraising - it's simply easier if upon admittance to the Fund, an LP only has to wire say, 20% of its full capital commitment rather than...

Funds generally call capital from limited partners (LPs) in several tranches in order to optimize fundraising - it's simply easier if upon admittance to the Fund, an LP only has to wire say, 20% of its full capital commitment rather than 50%. Sometimes, an LP may wish to send its full capital commitment ahead of time, as "pre-paid" capital, often for convenience. While this is possible, it creates more work administratively and on the banking side to track and silo the pre-paid funds separately - so it's not something to recommend or broadly offer in most cases.  IMPORTANT: Capital calls will "draw down" on pre-paid capital on the same percentage/schedule as the rest of the LPs. However, any pre-paid funds that have not been called CANNOT be used for any purposes, including deployment. 

Generally speaking, if contemplating SAFEs, convertible notes, or other types of convertible instruments which feature a discount, the discount does not factor into the portfolio company's valuation. These are typically held at cost (wha...

Generally speaking, if contemplating SAFEs, convertible notes, or other types of convertible instruments which feature a discount, the discount does not factor into the portfolio company's valuation. These are typically held at cost (what the investor paid) until a priced round where such instruments convert into preferred equity, though you will need to verify per the Fund's valuation policy.  When a convertible instrument is converted into preferred equity during a priced round (a preferred stock financing), the discount is applied at that time and typically affects the number of shares of preferred stock issued. Afterwards, the portfolio company's valuation is generally based on the price-per-share of the preferred stock of the latest financing applicable. 

We recommend the investor add a Follow-On Investment Information Rights side letter to the SAFE. This would be something like:  While the Investor’s Safe remains in force, the Investor shall have the right to receive copies of subsequent...

We recommend the investor add a Follow-On Investment Information Rights side letter to the SAFE. This would be something like:  While the Investor’s Safe remains in force, the Investor shall have the right to receive copies of subsequent Safe or convertible debt instruments executed by the Company at any future date. The Company will provide such copies physically by mail or by electronic mail within 10 days of execution to the address(es) provided.

A fund back office normally includes multiple functions, including legal, accounting, tax, and audit. Normally, these functions are provided by multiple external vendors. There is also a set of software offerings used by funds, commonly ...

A fund back office normally includes multiple functions, including legal, accounting, tax, and audit. Normally, these functions are provided by multiple external vendors. There is also a set of software offerings used by funds, commonly referred to as the VC Tech Stack, that includes a file system, cloud storage, document sharing, data room, digital signature, CRM, normal accounting system, fund accounting system, databases, email solutions, and middleware. The Decile Group provides a flat rate and unified offering with Decile Hub as the venture platform and Decile Partners as a single back office provider.

Should LPs ask for a shorter term for a venture capital fund than 10 years, it may be an indication that the LPs do not understand the asset class and are not aligned with the fund and its managers. Proceed with caution - further discuss...

Should LPs ask for a shorter term for a venture capital fund than 10 years, it may be an indication that the LPs do not understand the asset class and are not aligned with the fund and its managers. Proceed with caution - further discussions may be warranted. 

Below is a list of the different slides needed in a standard fund presentation. We recommend that you follow the guidelines exactly to build the early versions of the deck, then refine the presentation with feedback from pitching LPs. N...

Below is a list of the different slides needed in a standard fund presentation. We recommend that you follow the guidelines exactly to build the early versions of the deck, then refine the presentation with feedback from pitching LPs. NECESSARY FUND SLIDES: • Title: Displays the name of the fund, date of last update, and contact information of key individuals. • Thesis: Provides the one sentence investment Thesis. • Team: Introduces Managing Partners with a picture and three short bullets on each. • Team (Continued): Introduces Partners and Venture Partners with a picture and three short bullets on each. • Value Add: Describes the unique value that the fund offers to portfolio companies to generate LP returns. • Market: Demonstrates the market attractiveness through a simple chart, table, or statistic. • Track Record: Showcases 1-3 relevant deals with logos, few word descriptions, value added, and markup achieved. • Pipeline: Highlights 1-3 potential deals by sharing a general overview of the company without sharing specifics. • Allocation: Tabulates the number of deals by stage along with estimated investment, valuation, and ownership details. • Returns: Exhibits anticipated returns from hypothetical portfolio companies categorized by exit sizes. • Liquidity: Illustrates up to three projected fund outcome scenarios using multiple or IRR, possibly through a pie chart. • Economics: Provides a table outlining fund economic terms like Minimum Investment Amount, Management Fees, and Carried Interest. • Thank You: Provides the fund's tagline, target closing date, and contact information for the General Partners. • Disclaimer: Contains legal disclaimers to mitigate liability. OPTIONAL FUND SLIDES: • Deal Warehouse: Highlights 1-5 completed deals that will be transferred into the fund with company logos, brief descriptions, relevance to thesis, and investment terms. • Strategy: Describes how you will access the market for the best returns. • Operations: Explains any unique operational processes or systems. • Competition: Identifies relevant firms focused on the same markets with differentiation points. • Partners: A list of partners, possible as a logo pile, to improve the credibility of the fund. • Advantages: A list of items that help the fund to stand out. • Appendix: Houses updated old slides or additional research and data pertinent to the market segment.

Generally speaking, an Advanced Subscription Agreement (commonly known as an ASA and designed for use in the United Kingdom), is conceptually similar to a SAFE (originally designed for use within the United States).  However, there are ...

Generally speaking, an Advanced Subscription Agreement (commonly known as an ASA and designed for use in the United Kingdom), is conceptually similar to a SAFE (originally designed for use within the United States).  However, there are a few fundamental differences to be aware of, though these may vary depending on how the ASA is drafted - here are a few notable ones: • The ASA was designed to be eligible for certain tax advantages under the Enterprise Investment Scheme (EIS and the Seed Enterprise Investment Schemes (SEIS); • The ASA has a "Long Stop" term, essentially a date before which a conversion event (as defined in the ASA) must happen - otherwise the ASA automatically converts to equity on a pre-agreed price (this is not a concept in standard SAFES); • In order to qualify for the aforementioned tax advantages, it appears that the Long Stop date must be no later than 6 months after the issuance of the ASA; • 6 months may not be sufficient time for a startup to reach a qualifying conversion event (i.e. a preferred equity financing) - so this is something to carefully consider. *Please consult UK tax advice and/or counsel should you have questions about a specific set of circumstances.   

The best article to read about distribution waterfall is this one: Venture Fund Economics 

The best article to read about distribution waterfall is this one: Venture Fund Economics 

Please refer to the the Decile Hub Privacy Policy and Terms of Use for more details. Perhaps more importantly however, the Decile Group organization abides by the principles of the Mensarius Oath and we take this responsibility very seri...

Please refer to the the Decile Hub Privacy Policy and Terms of Use for more details. Perhaps more importantly however, the Decile Group organization abides by the principles of the Mensarius Oath and we take this responsibility very seriously. We do periodic audits, and these efforts will continue to increase as we scale the platform. 

Not yet. There are several privacy, ethical and business issues with this approach that would need to resolved before rolling a feature like this out. For example, the portfolio company many not want this to occur because they typically ...

Not yet. There are several privacy, ethical and business issues with this approach that would need to resolved before rolling a feature like this out. For example, the portfolio company many not want this to occur because they typically want to control this information. Also, though there is standardization with regards to the valuation policies of Decile Partner firms, that's not the case for other firms.

A fund typically requires approval from the Limited Partner Advisory Committee (LPAC) to proceed with a follow-on investment into a portfolio that was an angel investment of the general partner because it's a conflict of interest. 

A fund typically requires approval from the Limited Partner Advisory Committee (LPAC) to proceed with a follow-on investment into a portfolio that was an angel investment of the general partner because it's a conflict of interest. 

Do not form your fund and send LPAs to limited partners prior to you having at least $1m in PACTs signed or 10% of the fund, whichever is greater. This is a major mistake with dire consequences.  Also, please note that the arrangement th...

Do not form your fund and send LPAs to limited partners prior to you having at least $1m in PACTs signed or 10% of the fund, whichever is greater. This is a major mistake with dire consequences.  Also, please note that the arrangement that is suggested above has a very low probability of success and will possibly trigger broker-dealer issues as well.  If you need working capital, you can take investors in the GP entity. You can determine the valuation on the GP entity by working backwards from a low or middle case scenario of the fund model. So, doing some back of the napkin math, if your model is projecting that you will do a 2x on $5m fund - the valuation of the GP entity (the carry) is $1m. So, an investor can purchase 10% of the GP entity for $100k. That $100k will flow through to the ManCo (you) as working capital.  That being said, just because you can do this, it doesn't mean that you should. It's very rare that outsiders (including LPs) can help you with fundraising in a Fund 1. The LPs that invest in Fund 1s are mission aligned and are investing in the Managing Partner because they know and trust them. 

The fund admin functionality which includes the capital call tool is currently only available for Decile Partners firms. 

The fund admin functionality which includes the capital call tool is currently only available for Decile Partners firms. 

Yes - you should pause conversations until your figure out where you will domicile together with LPs. Please note that the Singaporean domicile and licensing process can take 1 year or more. Unless you are based in Singapore, we recommen...

Yes - you should pause conversations until your figure out where you will domicile together with LPs. Please note that the Singaporean domicile and licensing process can take 1 year or more. Unless you are based in Singapore, we recommend that you try to domicile somewhere else. 

By law, all offers and sales of securities within the United States must be either: • registered with the Securities and Exchange Commission (the SEC); or • issued relying on an available exemption from such registration. Generally spea...

By law, all offers and sales of securities within the United States must be either: • registered with the Securities and Exchange Commission (the SEC); or • issued relying on an available exemption from such registration. Generally speaking, "public" type offerings (for example an IPO) must be registered (such as any stocks publicly trading on the Dow Jones or NASDAQ) - this is a long and complex process. When startups raise capital through private markets, i.e. raising from venture capital funds, the offerings are private by definition ("unregistered"). Therefore, they rely on an exemption from registration. • As startups almost universally (when fundraising from venture capital funds) issue unregistered securities, there are no specific legal considerations or potential risks to take into account other than the risks associated with investing into startups in general. • Startups typically work with counsel to issue securities, who usually shoulder the burden of ensuring compliance for exemptions from registration. *Please consult experienced local counsel if you have questions pertaining to securities issued in other jurisdictions.

The Fund Sheet in the VC Lab curriculum refers to the fund model that was developed during the accelerator.

The Fund Sheet in the VC Lab curriculum refers to the fund model that was developed during the accelerator.

UPDATE: February 5, 2024 Cornerstone version 3 is available to download from VC lab here.

UPDATE: February 5, 2024 Cornerstone version 3 is available to download from VC lab here.

Mercury Bank and Grasshopper Bank are good options. 

Mercury Bank and Grasshopper Bank are good options.