All Questions

The startup typically will retain their lawyer to manage this transaction because they want to control their cap-table. However, since it's a fairly common practice, the law firm can be pretty efficient here.  With respect to the fund, ...

The startup typically will retain their lawyer to manage this transaction because they want to control their cap-table. However, since it's a fairly common practice, the law firm can be pretty efficient here.  With respect to the fund, it really depends on what fund administrator and the law firm the firm retains. Warehouse transfers are included in the Decile Launch offering. However, it's not uncommon for other law-firms and administrators to charge for this service. 

Generally speaking, transferring a warehoused investment from an entity/company is fine so long as it is wholly owned by the investor.  Warehoused investments intended to be transferred to a fund should be invested into directly by the ...

Generally speaking, transferring a warehoused investment from an entity/company is fine so long as it is wholly owned by the investor.  Warehoused investments intended to be transferred to a fund should be invested into directly by the fund manager. If there are other angel investors investing into the same company/opportunity, they can invest via an SPV if they choose.

A warehoused investment is an investment a (prospective) fund manager makes personally (or via a wholly owned entity) before the venture capital fund is set up and reaches a first close. Shortly after reaching a first close, the warehous...

A warehoused investment is an investment a (prospective) fund manager makes personally (or via a wholly owned entity) before the venture capital fund is set up and reaches a first close. Shortly after reaching a first close, the warehoused investments are then transferred into the fund. Planned investments do not count as warehoused investments. Warehoused investments are required to be disclosed to LPs before closing - this is typically done by listing them on the schedule of warehoused investments. The information required includes but is not limited to: • Company name; • Number and type of shares (if equity); • Amount of money paid, and currency used; • Potential conflicts of interest. Be sure to provide fully executed copies of your warehoused investments' legal agreements to your law firm or Decile Partners (if working with Decile Launch).

The PACT is a non-binding letter of intent. You can use your proposed names for your fund in the PACT until your form your entities on first close. With regards to the domicile, given that likely will domicile in Delaware and because it'...

The PACT is a non-binding letter of intent. You can use your proposed names for your fund in the PACT until your form your entities on first close. With regards to the domicile, given that likely will domicile in Delaware and because it's by far the most popular domicile for funds, I would just leave it as is. If the LPs that sign the PACT prefer that you change the domicile later in the process, you can always edit the PACT moving forward to accomodate your local jurisdiction. 

In general, no. However, if the LP(s) invested your prior fund, it's usually good practice to let the managing partners know that you are planning to reach out to them. 

In general, no. However, if the LP(s) invested your prior fund, it's usually good practice to let the managing partners know that you are planning to reach out to them. 

The GP commit is not part of the first close because it is the General Partner's contribution to the fund, which typically amounts to 1% of the target fund size. This commitment is separate from the investments made by Limited Partners d...

The GP commit is not part of the first close because it is the General Partner's contribution to the fund, which typically amounts to 1% of the target fund size. This commitment is separate from the investments made by Limited Partners during the first close. The GP commit demonstrates the General Partner's alignment of interests with the Limited Partners and their confidence in the fund's success. It is important to follow standard protocol and not let LPs influence the GP commit during the fundraising process.

Here is a great model that we recommend which is part of the VC Lab curriculum: https://foresight.is

Here is a great model that we recommend which is part of the VC Lab curriculum: https://foresight.is

As a general rule of thumb, the minimum transfer of a previous angel investment into a VC fund should be a $25K position at cost. Transfers should resemble, as much as possible, what an actual investment looks like in terms of stage of e...

As a general rule of thumb, the minimum transfer of a previous angel investment into a VC fund should be a $25K position at cost. Transfers should resemble, as much as possible, what an actual investment looks like in terms of stage of entry, sector and amount. A transfer should never be less than 10% of the target investment amount of the final fund, so, if a fund is planning to invest $1 MM, then the minimum transfer should be $100K. 

Various LP Archetypes have significantly different diligence requirements. Here are some high-level requirements: High Net Worth Individuals (HNWIs): Many HNWIs sign PACTs shortly after the initial pitch meeting and don't require a lot ...

Various LP Archetypes have significantly different diligence requirements. Here are some high-level requirements: High Net Worth Individuals (HNWIs): Many HNWIs sign PACTs shortly after the initial pitch meeting and don't require a lot of materials if any. Some may require a pitch deck or an executive summary. Family Offices: Family Offices typically require full data room access and references. Institutional LPs (Fund Of Funds, Sovereign Wealth Funds, Endowments etc..): Institutional LPs require all the information of Family Offices. In addition, they will do significantly more reference checks, diligences your back office vendors, operations systems, speak with your portfolio founders and do a lot of off list reference checks. Corporates: Corporate LPs require an enterprise sales process. Since they are investing to achieve some sort of strategic goal, they will focus their diligence on how your fund can help their company. Like most enterprise sales cycles, they can take 12 - 18 months to close or longer. For more information about the requirements of LP Archetypes, watch this video.

If the agreement is between you and the company, then so will the warehouse transaction. 

If the agreement is between you and the company, then so will the warehouse transaction. 

With high net worth individuals, the best approach is to not over inform. The more information, the more reasons for the LPs to say no. It's usually sub optimal to present this LP archetype with a data-room as a result. Rather consider u...

With high net worth individuals, the best approach is to not over inform. The more information, the more reasons for the LPs to say no. It's usually sub optimal to present this LP archetype with a data-room as a result. Rather consider using the data room to drip information as need. For example, let's suppose that the LP signed a PACT and they ask for additional information. Then, you can send them a link to the folder in your data room that contains the deck. Then, if let's say they request to learn about your team, you can unlock that folder for them. With HNW LPs less is more.

No. A fund can not accept advisory shares. Also, accepting shares as an individual creates various conflicts. Funds can however get warrant coverage. 

No. A fund can not accept advisory shares. Also, accepting shares as an individual creates various conflicts. Funds can however get warrant coverage. 

Attribution answers the question of how critical you were in making that specific investment that happen at the fund. For example - did you source the deal from external channels or were given the deal internally due to your particular d...

Attribution answers the question of how critical you were in making that specific investment that happen at the fund. For example - did you source the deal from external channels or were given the deal internally due to your particular domain expertise, for instance? The point is LPs need to believe that once you left the old fund, your personal network is strong enough to attract the best founders to your new fund. To do this, they are likely to require the following in diligence: 1) require the permission of the partners/organization to share the performance of the deals you worked with LPs  2) allow LPs to diligence records of deal related performance data and information such as Deal Memos 3) diligence records showing that you sourced and invested in those deals

Below are some high-level definitions with ranges. Please note that the metrics vary by region and sector. Pre-Seed Traction: Idea -> Early Signal of Product-Market Fit Product: Prototype -> Customer Product usage Team: Founders -> Cor...

Below are some high-level definitions with ranges. Please note that the metrics vary by region and sector. Pre-Seed Traction: Idea -> Early Signal of Product-Market Fit Product: Prototype -> Customer Product usage Team: Founders -> Core Founding Team Revenue: No Revenue -> First Paying Customers/Pilots Seed Traction: Paying Customers -> Product-Market Fit with Core Customers Product: Early User Retention -> Growth in Product Usage Team: Core Founding Team -> First Employees  Revenue: First Paying Customers/Pilots -> Expanding Customer Base

All of your previous work at a venture capital fund, including the performance of the portfolio, is normally the intellectual property of that venture capital firm and can not be used without explicit consent. Consent is granted by secur...

All of your previous work at a venture capital fund, including the performance of the portfolio, is normally the intellectual property of that venture capital firm and can not be used without explicit consent. Consent is granted by securing a signed attribution letter from the venture capital firm.  Additionally, performance track record is a closely guarded secret in the venture capital industry. Funds do not want their track record shared, and also portfolio companies do not want their performance shared. As a result, securing an attribution letter to share past performance is important from both a legal and an ethical standpoint.

It's not necessary to have one. This is typically handled at the ManCo level, not the fund. Also, see the Limited Operations Mode in the cornerstone LPA, downloadable here, which states:   “Limited Operations Mode. In the event the Limi...

It's not necessary to have one. This is typically handled at the ManCo level, not the fund. Also, see the Limited Operations Mode in the cornerstone LPA, downloadable here, which states:   “Limited Operations Mode. In the event the Limited Partners claim there exists a Material Breach, Limited Partners holding more than 66 ⅔% of the aggregate Commitment Percentages held by all Limited Partners (“Requisite Majority”) may cause the Fund and General Partner to enter into “Limited Operations Mode.” The period of Limited Operations Mode shall commence at the time that a Requisite Majority provides written notice to General Partner particularizing the facts constituting a Material Breach and ending automatically on the date ninety (90) days later, which period may be extended by successive ninety (90) day periods if, and only if, a Requisite Majority provides written notice extending such period. During Limited Operations Mode General Partner and the Limited Partners will negotiate in good faith to resolve the dispute. ”

Please review this article on track record. 

Please review this article on track record. 

This is possible via a self directed IRA with experience in venture capital such as STRATA.

This is possible via a self directed IRA with experience in venture capital such as STRATA.

This depends on local regulations. In many jurisdictions, unpaid internships are not legal.

This depends on local regulations. In many jurisdictions, unpaid internships are not legal.

Management fees are typically paid on the basis of committed capital. Fees are normally drawn from the called capital, which will be defined in the LPA. You may find this article, this article and this article helpful. 

Management fees are typically paid on the basis of committed capital. Fees are normally drawn from the called capital, which will be defined in the LPA. You may find this article, this article and this article helpful.