All Questions

You can put advisors in your deck but not their carry percentage

You can put advisors in your deck but not their carry percentage

This depends on whatever process you want and whatever your LPA says. Most new managers make all of the investment decisions unless there is a conflict of interest, and then an LPAC (Limited Partner Advisor Committee) needs to approve. A...

This depends on whatever process you want and whatever your LPA says. Most new managers make all of the investment decisions unless there is a conflict of interest, and then an LPAC (Limited Partner Advisor Committee) needs to approve. Again, this is dependent on the LPA. Read the Cornerstone LPA if you are interested in learning more.

It's where you disclose certain rules related to conflicts or other matters. Here are some example fund rules:  • GPs must exclusively invest from the fund and are not allowed to Angel invest  • All investments go to IC etc…

It's where you disclose certain rules related to conflicts or other matters. Here are some example fund rules:  • GPs must exclusively invest from the fund and are not allowed to Angel invest  • All investments go to IC etc…

If you are going to make a personal investment, you can use it. If your plan is to invest from the fund, you can't because you don't have a fund.

If you are going to make a personal investment, you can use it. If your plan is to invest from the fund, you can't because you don't have a fund.

Just start helping amazing companies without any expectations of equity. Help them get to new rounds of financing. Then, you will build network effects, and maybe some of the founders will introduce you to other founders or offer you the...

Just start helping amazing companies without any expectations of equity. Help them get to new rounds of financing. Then, you will build network effects, and maybe some of the founders will introduce you to other founders or offer you the opportunity to invest in their next round.

Reverse it and say you’re going to be selective with your investments to ensure the fund succeeds. If you call higher than the recommended, all future LPs will have to be on the higher capital call schedule. This will make it harder for...

Reverse it and say you’re going to be selective with your investments to ensure the fund succeeds. If you call higher than the recommended, all future LPs will have to be on the higher capital call schedule. This will make it harder for you to close later LPs who are expecting this amount.

Managing Partners tend to remain constant in over 90% of firms, and the General Partner team, which includes Partners and Venture Partners, frequently changes beatween funds. When there are changes, a new General Partner entity is formed...

Managing Partners tend to remain constant in over 90% of firms, and the General Partner team, which includes Partners and Venture Partners, frequently changes beatween funds. When there are changes, a new General Partner entity is formed for the new fund. The Management Company (ManCo) remains the same.

An SPV is a non-blind vehicle that contains one deal. A venture fund is a blind pool, the limited partners do not know what deals are going to be invested in, that contains a diversified set of portfolio companies, usually 10 to 25. Th...

An SPV is a non-blind vehicle that contains one deal. A venture fund is a blind pool, the limited partners do not know what deals are going to be invested in, that contains a diversified set of portfolio companies, usually 10 to 25. The fees are normally much smaller for SPVs, which make then attractive to limited partners. SPVs end up being a distraction to venture capitalists looking to set up a venture capital firm, since they are not real venture funds and since the economics are small.

We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in...

We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in a bad negotiating position. If you want to offer something, offer a discount on SPVs to invest in your follow-on into portfolio companies, and you can offer this as a handshake agreement.

We strongly recommend that you do not take investments into the Management Company. The Limited Partner will own your outcomes for decades. Instead, the best practice is to take investment into the General Partner, which is converted in ...

We strongly recommend that you do not take investments into the Management Company. The Limited Partner will own your outcomes for decades. Instead, the best practice is to take investment into the General Partner, which is converted in our Stewardship Agreement below. Investors buy a Class V position to take preferred ownership of the carried interest without voting control: Password: Cohort4

Under US securities laws, certain private funds are not required to be registered or regulated as investment companies laws such as under the following exclusions: ·       Traditional 3(c)(1) Fund (no more than 100 beneficial owners) ·  ...

Under US securities laws, certain private funds are not required to be registered or regulated as investment companies laws such as under the following exclusions: ·       Traditional 3(c)(1) Fund (no more than 100 beneficial owners) ·       3(c)(7) Fund (limited to qualified purchasers) ·       3(c)(1) Qualifying Venture Capital Fund (no more than $10M from no more than 250 beneficial owners). Fund advisers are required to register with the SEC unless they are exempt from applicable registration requirements such as investment advisers who solely manage qualifying venture capital funds or solely manage private fund assets of less than $150 million. They are, however, required to make certain filings and report certain information annually to the SEC as exempt reporting advisers.

1. Before you do this, look into if there are similar issues acts like ITAR and CFIUS in the US. A lot of space companies will face this challenge because governments will try to protect a lot of the secrets because they affect national ...

1. Before you do this, look into if there are similar issues acts like ITAR and CFIUS in the US. A lot of space companies will face this challenge because governments will try to protect a lot of the secrets because they affect national security. If the 2nd country also has a form of ITAR, then this may pose a risk. 2. Pre-Seed basically includes angel, So call it Pre-Seed.

It will be extremely challenging for a first time manager to raise a $50m fund. The majority of LP archetypes do not invest in new managers. You should raise a smaller fund to prove out the thesis and to build your track record. Then, us...

It will be extremely challenging for a first time manager to raise a $50m fund. The majority of LP archetypes do not invest in new managers. You should raise a smaller fund to prove out the thesis and to build your track record. Then, use this to raise a larger fund.

Just because people are saying stuff like this, it doesn’t mean it’s good. In fact, it isn’t, especially relating to your thesis. If you are going to do a network pitch, position it around the thesis. Having 50 advisors that are on thes...

Just because people are saying stuff like this, it doesn’t mean it’s good. In fact, it isn’t, especially relating to your thesis. If you are going to do a network pitch, position it around the thesis. Having 50 advisors that are on thesis is much better then 500 ‘connections’

Minimum commitment should be $100k The ideal # of LPs is in the range of 25 - 50.

Minimum commitment should be $100k The ideal # of LPs is in the range of 25 - 50.

C-corps have certain tax implications that will not not make fund investing viable in many cases. Most funds are setup as flow-through entities such as LLCs.

C-corps have certain tax implications that will not not make fund investing viable in many cases. Most funds are setup as flow-through entities such as LLCs.

This is prohibitively expensive. You need a $25 MM fund size to justify this, and it really would only work if you had many LPs and portfolio companies in both jurisdictions. The EU is too expensive as a domicile for most new managers. ...

This is prohibitively expensive. You need a $25 MM fund size to justify this, and it really would only work if you had many LPs and portfolio companies in both jurisdictions. The EU is too expensive as a domicile for most new managers. The minimum fund size is $15 MM to $25 MM to domicile in the EU. VC Lab is exploring ways for EU funds to domicile in the US, as well as setting up a lower cost alternative domicile in the EU.

Hard NO.  See this article for more assistance: https://govclab.com/2022/06/28/general-soliciation/

Hard NO.  See this article for more assistance: https://govclab.com/2022/06/28/general-soliciation/

Possibly - conflicts of interest are situation-specific, so it would be best to dig into the details and consult an experienced fund formation specialist attorney as needed. If, for example, XYZ company has a venture fund and the fund m...

Possibly - conflicts of interest are situation-specific, so it would be best to dig into the details and consult an experienced fund formation specialist attorney as needed. If, for example, XYZ company has a venture fund and the fund manager's friend is involved in it, a conflict of interest would almost definitely arise. Additionally, if XYZ company is working on competing technology to the fund's portfolio companies, that could also be a conflict.

This is the industry standard, as it allows you to memorialize why you do a deal. Deals often take many years to create liquidity, and it is important to be able to analyze your decision making process many years in the future. They are...

This is the industry standard, as it allows you to memorialize why you do a deal. Deals often take many years to create liquidity, and it is important to be able to analyze your decision making process many years in the future. They are not required. However, Limited Parrners do expect them and often ask to see them.