All Questions

There are a variety of factors that contribute to the investment timeline. For example, if you are the lead investor who is setting the terms, you will do significantly more due-diligence and try to help the company circle some more new ...

There are a variety of factors that contribute to the investment timeline. For example, if you are the lead investor who is setting the terms, you will do significantly more due-diligence and try to help the company circle some more new investors. On the other hand, if you are participating in a party round with no lead which is pretty common at the pre-seed stage, you may try to accomodate the rough timeline set by the founders and other investors. A typical process takes ~1 month. However during cyclical economic slowdowns or the holidays, it's not uncommon for this timeline to be extended to to 2 months or more.

There are a number of female VCs on the Midas List: https://www.forbes.com/sites/truebridge/2022/04/12/midas-list-2022-top-female-investors/?sh=b3fd17b46b2c

There are a number of female VCs on the Midas List: https://www.forbes.com/sites/truebridge/2022/04/12/midas-list-2022-top-female-investors/?sh=b3fd17b46b2c

While fundraising, a fund should not have a publicly viewable website in order to avoid any appearance of general solicitation.  The management company can have a website with information on its team members, their past activities (subje...

While fundraising, a fund should not have a publicly viewable website in order to avoid any appearance of general solicitation.  The management company can have a website with information on its team members, their past activities (subject to confidentiality obligations) and the types of startups that they are looking to attract.  The management company should not have any reference to any fund that is raising funds.

Generally speaking, fund managers should err towards not accepting capital commitment increases after the Fund's Fundraising Period has ended. Issues of fiduciary duty can be implicated, depending on the circumstances, and enough of a to...

Generally speaking, fund managers should err towards not accepting capital commitment increases after the Fund's Fundraising Period has ended. Issues of fiduciary duty can be implicated, depending on the circumstances, and enough of a total increase can even trigger amended regulatory filings (which are public). In a practical sense, any such acceptances should be one-off exceptions made within a reasonable amount of time from the Fundraising Period ending. Within 3 months might be nominal, within 6 months might start to raise eyebrows, and beyond that said issues of fiduciary duty may become more pronounced. Note that the above guidelines are general, and the viability of any such acceptances may also depend on a Fund's particular circumstances (markups, exits, etc.). We strongly recommend discussing these  your fund administration team first.

You need to create all 3 entities at the same time, including the ManCo. The distribution strategy referred to in Sprint 9 (https://vcl.to/ManCo-strategy), refers to how the ManCo will be setup to distribute fees and cary to the managing...

You need to create all 3 entities at the same time, including the ManCo. The distribution strategy referred to in Sprint 9 (https://vcl.to/ManCo-strategy), refers to how the ManCo will be setup to distribute fees and cary to the managing partners and potential employees. 

Please read this article on the structure of the Venture Studio: https://govclab.com/2023/04/25/how-to-build-a-venture-studio/

Please read this article on the structure of the Venture Studio: https://govclab.com/2023/04/25/how-to-build-a-venture-studio/

Yes it is and you should change you name. Even if you could technically win a legal dispute, the effort and the cost would not justify it.

Yes it is and you should change you name. Even if you could technically win a legal dispute, the effort and the cost would not justify it.

When a venture capital fund takes in investors who are subject to ERISA, the fund may also become subject to the numerous and onerous ERISA regulations without an exemption. Such regulations would make operating the fund untenable. For e...

When a venture capital fund takes in investors who are subject to ERISA, the fund may also become subject to the numerous and onerous ERISA regulations without an exemption. Such regulations would make operating the fund untenable. For example, the fund may be prohibited from paying carried interest to the fund managers. There are two exemptions through which a venture capital fund can avoid being subject to ERISA:   1. 25% Test Exemption: Less than 25 percent of each class of equity interests of the venture capital fund is held by investors who are subject to ERISA.   2. Venture Capital Operating Company (VCOC) Exemption: At least 50% of the venture capital fund’s assets are invested in operating companies in which the fund has contractual management rights.     In order to secure the VCOC Exemption, it has become customary for venture capital funds to ask each of its portfolio companies to sign a management rights letter providing the fund with such management rights.   It is important to note that a fund relying on the VCOC exemption should ensure that its first portfolio investment includes contractual management rights in order to satisfy the exemption requirement, and that it does not take LP money subject to ERISA before that first investment is made; otherwise, the fund be disqualified from being eligible for the exemption.   In addition, if the fund managers or their affiliates “warehouse” portfolio investments for transfer to the fund, it is important that the transfer documents provide that management rights with regard to such investments be transferred to the fund to ensure that the venture capital fund has the necessary contractual management rights to satisfy the exemption.   As ERISA regulations are complex, fund managers should seek the advice of the relevant professionals to ensure compliance if they will be receiving investor funds subject to ERISA.

The Cornerstone has a defined term: “Material Adverse Effect” means any activity relating to a Limited Partner’s participation in the Fund, if the Limited Partner or General Partner determines: (A) that such activity is reasonably likely...

The Cornerstone has a defined term: “Material Adverse Effect” means any activity relating to a Limited Partner’s participation in the Fund, if the Limited Partner or General Partner determines: (A) that such activity is reasonably likely to (i) result in a violation of a law, rule or government order, (ii) subject a Portfolio Company, such Limited Partner, the Fund or any Affiliate of the foregoing to any material filing, regulatory requirement or tax, or (iii) result in any Securities or other assets owned by the Fund being deemed to be “plan assets” under ERISA; or (B) that a Limited Partner or any of its Affiliates becomes subject to sanctions regulations from any country, the European Union, the United Nations Security Council or any other such organization that would impact the ability of the Fund to continue transacting with such Limited Partner.

From a tax perspective any K-1 income received from the fund would be tax deferred (assuming regular IRA) until the money is withdrawn from the IRA at which time it would be taxed at ordinary income rates. In effect the original characte...

From a tax perspective any K-1 income received from the fund would be tax deferred (assuming regular IRA) until the money is withdrawn from the IRA at which time it would be taxed at ordinary income rates. In effect the original character of the income would be lost so no long term capital gains rates or QSBS treatment if applicable. This is on top of the restricted transactions mentioned by Hans. 

As a general matter, a Fund Manager should strictly NOT provide any advice, especially with respect to legal or tax matters. These are highly regulated professions (specifics will vary by country) with specific rules about who, how, an...

As a general matter, a Fund Manager should strictly NOT provide any advice, especially with respect to legal or tax matters. These are highly regulated professions (specifics will vary by country) with specific rules about who, how, and under what type of relationship any such advice may be provided, and crossing the lines opens the door to liability, lawsuits, potentially unauthorized practice of law and more. TL:DR - don't do it. Decile Partners' subject matter experts may provide generalized explanations and/or guidance. If working with Decile Launch, in particular, additional assistance is usually available. However if specific advice is required or requested, then the safest course of action (for the Fund Manager) is for the party in question to engage their own legal or tax experts. Decile Partners can provide referrals on request, of course, and even provide guidance about how best to work with such experts. 

Possibly - however it really depends on what kind of retirement funds/accounts are being contemplated, and where and how those funds/accounts are held. Country-specific regulations may also apply, as a general rule of thumb. For exampl...

Possibly - however it really depends on what kind of retirement funds/accounts are being contemplated, and where and how those funds/accounts are held. Country-specific regulations may also apply, as a general rule of thumb. For example, Delaware-domiciled funds working with Decile Partners may be able to accept certain retirement funds via a certain type of trust company vendor (such as Strata Trust Company, a partner) - however, doing so takes additional setup on the part of the Fund, as well as the limited partner in question. TL:DR - possible depending on jurisdiction and trust company (as applicable), but more complicated and may take longer process-wise. 

As a general rule, you should validate is the name or a substantially similar name is not being used anywhere for a business in a related field. So, you want to look for more than just a trademark in more locations than just BVI. To star...

As a general rule, you should validate is the name or a substantially similar name is not being used anywhere for a business in a related field. So, you want to look for more than just a trademark in more locations than just BVI. To start, you begin with extensive searching for your name or similar names on Google. If there is no competition in a similar space, then, the largest database of corporate names is in Delaware, so this is a good place to start to see if there is a business entity with a similar name. Lastly, if everything is clear, then you do a trademark search. The link to search in Delaware is: https://icis.corp.delaware.gov/Ecorp/NameReserv/NameReservation.aspx

*For informational purposes only **Fund managers should avoid any activities which may be construed as providing or interpreting legal tax, or other advice to prospective limited partners.  Question: Does a Canadian fund manager need t...

*For informational purposes only **Fund managers should avoid any activities which may be construed as providing or interpreting legal tax, or other advice to prospective limited partners.  Question: Does a Canadian fund manager need to register as an investment fund manager, a portfolio manager, or an exempt market dealer with the Ontario Securities Commission?  Answer: Generally speaking, if the fund being managed is considered a venture or private equity fund (and not a hedge fund), the fund manager does not need to register.    A venture or private equity fund must make primarily “active investments” (as opposed to “passive” investments made by hedge funds), typically for purposes including: • Exercising or seeking to exercise control of an issuer in which it invests; or • Being actively involved in the management of an issuer in which it invests.   Indicators of “active investments” can include but are not limited to the following: • Holding securities representing more than 10% of the outstanding equity or voting securities of portfolio company; • Having the right to appoint board or board observer seats for a portfolio company; • Having the ability to impose restrictions on the management, or approval or veto rights over decisions made by the management of a portfolio company; • Providing advice or mentorship to a portfolio company.   Should these criteria ever be put to the test, it will come down to a factual analysis of the circumstances – there is no “check the box” type of exercise done.    Please refer to the Ontario Securities Commission’s website for general guidance on this topic, or consult an experienced, qualified fund/securities attorney in Ontario for assistance with a specific situation. 

Generally speaking, an SPV should not be used for deal warehousing. While there are ways in which it may be technically possible, it complicates matters (for the Fund) and is sub-optimal. Fund managers commonly make initial investments...

Generally speaking, an SPV should not be used for deal warehousing. While there are ways in which it may be technically possible, it complicates matters (for the Fund) and is sub-optimal. Fund managers commonly make initial investments either as individuals, or via wholly-owned entities such as LLCs (in the US). There are no particular issues or concerns with investing via an LLC versus investing as an individual. However, it is important to note that the initial investment paperwork issued to the LLC (or the individual for that matter) should be issued cleanly/completely and reflect the LLC's correct name, to ensure there are no additional complications when it comes time to transfer the warehoused deals into the Fund. 

It's possible for you to transfer your founder shares into the fund, however there are a number of issues with this approach. The shares are typically transferred at cost, and founders usually buy their shares at the onset of the company...

It's possible for you to transfer your founder shares into the fund, however there are a number of issues with this approach. The shares are typically transferred at cost, and founders usually buy their shares at the onset of the company at nominal price. The shares are typically common stock instead of preferred which means that they are lower in the preference stock. Finally, the company many not want to replace a founder with a fund on their cap-table because it may introduce diligence risk in future financings. 

Extending the fundraising period can provide additional room to fundraise in case a fund does not expect to achieve its stated fundraising target within the originally scheduled fundraising period. This measure should not be taken light...

Extending the fundraising period can provide additional room to fundraise in case a fund does not expect to achieve its stated fundraising target within the originally scheduled fundraising period. This measure should not be taken lightly, though, and it would be advisable to discuss such decisions with an LPAC or a majority of LPs. It’s important to note that extending the fundraising period may warrant examining the management fee schedule (should additional work be required upfront).  LPs may push back if they perceive that LPs admitted outside of the original fundraising period will receive preferential treatment. They may also believe that extending the fundraising period signals an inability of the fund manager to raise money.

It's generally important for a fund manager to sign investment agreements with the correct signature block - it's especially important for the signature block to reference the correct Fund name, as well as it's General Partner and Manage...

It's generally important for a fund manager to sign investment agreements with the correct signature block - it's especially important for the signature block to reference the correct Fund name, as well as it's General Partner and Management Company, in most cases. This will avoid annoying cleanup later, as these types of errors will be caught at the latest when/if the startup gets to a priced round and is working with counsel, or is undergoing due diligence or an audit.  For Funds working with Decile Partners, the signature should appear as the following (for Delaware domiciled funds, as an example): Full Fund Name, LP By: Full General Partner Name, LLC, its General Partner By: Full Management Company Name, LLC, its Manager By: _____________________________ Name: Fund Manager Name Title: Managing Partner Refer to your Fund's legal agreements for more details - fund managers often have the correct signature block on a Word or PDF document and simply send it to startups during the signing process to ensure that it is correct. Counsel will typically insist that the signature block is correct or they will not approve for signing. It is also just a good habit to get into.  

Yes. We strongly advise you not to pitch people who do no meet the accredited investor requirements in general. 

Yes. We strongly advise you not to pitch people who do no meet the accredited investor requirements in general. 

Hi Francisco, unfortunately the ‘download all at once’ option for files in a Data Room currently doesn’t exist, so you will have to download them one by one for now.  We do have this feature on our product roadmap, so we hope it will be...

Hi Francisco, unfortunately the ‘download all at once’ option for files in a Data Room currently doesn’t exist, so you will have to download them one by one for now.  We do have this feature on our product roadmap, so we hope it will be in place at some point in the near future.