All Questions

Most Favorite Nation (MFN) is a negotiated provision in SAFE or convertible investments, which provides the investor with the best terms for that group of investments. This is sometimes used in early investments where other terms (valuat...

Most Favorite Nation (MFN) is a negotiated provision in SAFE or convertible investments, which provides the investor with the best terms for that group of investments. This is sometimes used in early investments where other terms (valuation cap or discount) are not yet decided, and the investor and company want to execute the investment quickly. Some MFN provisions require the investor be informed of new investments with better terms, then specifically electing to take the new terms. Some MFN provisions apply on conversion, where the actual conversion to shares is determined based on the MFN and any other terms.

The dataset in the system is incorrect, which is incorrectly reflecting investments and their values.

The dataset in the system is incorrect, which is incorrectly reflecting investments and their values.

The best practices for an Employee Stock Ownership Plan (ESOP) include ensuring that founders and employees of a startup have vesting schedules to secure investment from reputable VCs. This helps align the interests of the employees with...

The best practices for an Employee Stock Ownership Plan (ESOP) include ensuring that founders and employees of a startup have vesting schedules to secure investment from reputable VCs. This helps align the interests of the employees with the long-term success of the company and provides a structured approach to equity distribution.

In Hub on the left nav, select Back Office, Investments then click Update Valuation next to the portfolio company. Now click Add Funding Round and add the relevant information for the new round, click Save. Now click Funding Rounds and s...

In Hub on the left nav, select Back Office, Investments then click Update Valuation next to the portfolio company. Now click Add Funding Round and add the relevant information for the new round, click Save. Now click Funding Rounds and select > for the applicable new Funding Round (the one you just added) , attach documents (like the priced round agreements and conversion spreadsheet)and links to the new funding round, then click the Notes tab and add relevant notes, click Save.

Within the Fund Overview page, you can generate your annual report.

Within the Fund Overview page, you can generate your annual report.

Consider very carefully the following factors while deciding on the allocation of shares between two owners and/or managing partners: • overall contribution; • value (expertise, network, etc.) It is critical to have a clear understandin...

Consider very carefully the following factors while deciding on the allocation of shares between two owners and/or managing partners: • overall contribution; • value (expertise, network, etc.) It is critical to have a clear understanding, as this is a business relationship that must last 10 years minimum, if not 15 or more. It is also important to think carefully about allocating the shares equally between the 2 owners/managing partners. This can create a deadlock situation (depending on certain majority thresholds in the Management Company's operating agreement) where decisions cannot be made quickly and in an efficient manner. It is common for one managing partner to hold a very slight majority in order to facilitate ease of decision making. For those working with Decile Partners, carefully review the Majority of Interests and the Majority of Managers thresholds in the Alignment Agreement as well. 

The separation between the Management Company and the General Partner entity in a Venture Capital firm/fund structure allows for scalability and flexibility. The Management Company owns the brand and intellectual property, and is where t...

The separation between the Management Company and the General Partner entity in a Venture Capital firm/fund structure allows for scalability and flexibility. The Management Company owns the brand and intellectual property, and is where the firm's owners and/or managing partners are located. The General Partner entity, which is majority owned by the Management Company, is where partners managing only one specific fund sit. This structure allows for the addition of new funds under the same firm, facilitating growth and scalability. It also allows for the inclusion of partners or Venture Partners in one specific fund without requiring them to be part of the Management Company. There are other Venture Capital firm structures that use one entity to fulfill both Management Company and General Partner functions, or keep them both but have them separated instead of stacked vertically via ownership. This depends on the particular circumstances of the setup, but will generally have much more complex agreements.   We recommend simplicity and scalability as the default principle whenever possible. 

If a fund manager passes away or is incapacitated, the fund's Limited Partner Agreement (LPA) typically includes language or provisions addressing this event.  For example, in the Cornerstone LPA published by Decile Group, such an event...

If a fund manager passes away or is incapacitated, the fund's Limited Partner Agreement (LPA) typically includes language or provisions addressing this event.  For example, in the Cornerstone LPA published by Decile Group, such an event happening to a "Key Individual" will trigger the fund to enter 'Limited Operations' mode. In this mode, the fund's activities become restricted, it is up to the General Partner entity and the Limited Partners to negotiate to determine what happens next.  The specifics of how this situation is handled can vary depending on the terms set out in the LPA - be sure to read carefully and consult experienced fund counsel for questions regarding a specific set of circumstances. 

If you don't issue all the shares in your Share Pool to Venture Partners, those shares simply remain unallocated. They can be issued at a later date to new Venture Partners or other team members if needed. It's important to note that un...

If you don't issue all the shares in your Share Pool to Venture Partners, those shares simply remain unallocated. They can be issued at a later date to new Venture Partners or other team members if needed. It's important to note that unissued shares from the Share Pool are not considered when calculating distributions or voting - such shares are not issued and/or outstanding for these purposes. Unissued shares are also not automatically re-allocated to the General Partner entity. 

Adding a Venture Partner or another person to your firm's Management Company is a significant decision as it involves sharing ownership and control of the entire firm. This person would then also earn carried interest on all funds under ...

Adding a Venture Partner or another person to your firm's Management Company is a significant decision as it involves sharing ownership and control of the entire firm. This person would then also earn carried interest on all funds under the firm's umbrella. It's recommended to only include individuals in the Management Company who are part of the founding team and will run the firm for a long duration. Remember a Fund will be under management for a minimum of 10 years, and the Firm for far longer - trust and commitment to the long-term goals of the Firm are paramount.  For individuals involved in managing or assisting only one specific fund, it's standard to include them as Venture Partners in the General Partner entity only. 

Venture Partners sit in the General Partner entity of a Venture Capital firm. They are involved in managing only one specific fund and can earn a percentage of the carried interest for that particular fund. They are typically not part of...

Venture Partners sit in the General Partner entity of a Venture Capital firm. They are involved in managing only one specific fund and can earn a percentage of the carried interest for that particular fund. They are typically not part of the Management Company, which is where the firm's owners and/or managing partners are located.

With the popular Venture Capital firm/fund structure used by Decile Partners, scaling a Venture Capital firm is relatively easy. New Venture Capital funds can be spun up under the same Management Company (requiring only a new General Par...

With the popular Venture Capital firm/fund structure used by Decile Partners, scaling a Venture Capital firm is relatively easy. New Venture Capital funds can be spun up under the same Management Company (requiring only a new General Partner entity and a new Limited Partnership). The separation between Management Company and General Partner entity also makes it possible to bring in a partner to work on one specific fund, without the requirement that they are also in the Management Company and earning carried interest on all funds under the firm's umbrella. 

Generally speaking, a Venture Capital firm is a reference to the management entity managing one or more Venture Capital Funds.  A Venture Capital fund is a specific pool of capital that the management company invests.  Venture Capital fi...

Generally speaking, a Venture Capital firm is a reference to the management entity managing one or more Venture Capital Funds.  A Venture Capital fund is a specific pool of capital that the management company invests.  Venture Capital firms typically aim to manage many such pools of capital as they grow and scale.

Assessing capital requirements is the first step in a capital call process for a venture capital fund. Fund managers determine the need for additional capital, which may arise due to new investment opportunities or ongoing fund expenses,...

Assessing capital requirements is the first step in a capital call process for a venture capital fund. Fund managers determine the need for additional capital, which may arise due to new investment opportunities or ongoing fund expenses, such as management fees, legal and accounting fees, and other operational costs. This assessment is crucial to ensure the fund has sufficient capital to meet its investment objectives and cover its expenses.

The income in a fund's Profit and Loss statement (P&L) typically includes realized gains from the sale of investments, unrealized gains from the increase in fair market value of investments, and any income generated from the investments ...

The income in a fund's Profit and Loss statement (P&L) typically includes realized gains from the sale of investments, unrealized gains from the increase in fair market value of investments, and any income generated from the investments such as dividends or interest. It's important to note that the specific components can vary depending on the fund's investment strategy and the types of investments it holds.

Decile Partners generally works with and recommends the following standardized and scalable structure for Venture Capital firms/funds (Delaware domicile): • Management Company (ManCo) formed as a limited liability company. This is where ...

Decile Partners generally works with and recommends the following standardized and scalable structure for Venture Capital firms/funds (Delaware domicile): • Management Company (ManCo) formed as a limited liability company. This is where the founders and owners of the Firm sit as managing partners. The ManCo owns the brand, any intellectual property - this is also where vendors and staff (long term) sit.  • General Partner (GP) formed as a limited liability company. This entity is majority owned by the ManCo, receives the carried interest, and is also where any partners managing only one Fund (as opposed to the Firm) sit. Venture Partners earning a % of the carried interest for only one Fund will also sit here. Note that while confusing, "GP" here refers to the entity, not to an individual who may be titled as a "General Partner" separately - be sure to distinguish.  • Limited Partnership (the Fund) formed as a limited partnership. This entity is where the limited partners invest into, and where deployments into portfolio companies come out of. This is also the entity from which distributions flow.  There are other  ways to set up a Venture Capital firm/fund, though structures can become quite complex over time to accommodate the needs of certain investors; for example the manager may set up side vehicles, parallel funds, master-feeder structures, blockers in consideration of tax or other regulatory  issues.