All Questions

There are other structures, but they are not commonly accepted. As a result, GPs that attempt to setup non-standard structures get significant resistance from LPs and experience severe fundraising challenges. Read this: https://govclab....

There are other structures, but they are not commonly accepted. As a result, GPs that attempt to setup non-standard structures get significant resistance from LPs and experience severe fundraising challenges. Read this: https://govclab.com/2023/05/26/vc-management-fees

The LPA specifies the conditions for what will take place at the end of the fund life. The options are: extend the fund life by 1 or 2 years, distribute the remaining interest to LPs, or liquidate the fund via a secondary transaction. Ty...

The LPA specifies the conditions for what will take place at the end of the fund life. The options are: extend the fund life by 1 or 2 years, distribute the remaining interest to LPs, or liquidate the fund via a secondary transaction. Typically, when extending the fund, GPs don’t charge management fees.

Here are some potential causes of LP concerns during diligencing on GPs: • Size of fund too large for new manager • Large # of deals per person • Poor updates  • Small network • Bad references from portfolio founders  • Bad references fr...

Here are some potential causes of LP concerns during diligencing on GPs: • Size of fund too large for new manager • Large # of deals per person • Poor updates  • Small network • Bad references from portfolio founders  • Bad references from co-investors  • Unfamiliar sector • GP is unable to openly discuss previous investment mistakes • GPs track record doesn't match the thesis

Companies in certain critical technologies or other types of industries or geographical proximity to national security matters (i.e., airports, submarine bases) may require investors to represent that the investor is not owned or control...

Companies in certain critical technologies or other types of industries or geographical proximity to national security matters (i.e., airports, submarine bases) may require investors to represent that the investor is not owned or controlled by foreign persons. That’s because if a foreign person obtains a certain level of control over the company, then the investment transaction will require review by CFIUS. Here’s the traditional representation that companies concerned with Defense Production Act matters will request from their investors: CFIUS Foreign Person Status. The Purchaser is not a “foreign person” or a “foreign entity,” as defined in Section 721 of the Defense Production Act of 1950, as amended, including all implementing regulations thereof (the “DPA”). The Purchaser is not controlled by a “foreign person,” as defined in the DPA. The Purchaser does not permit any foreign person affiliated with the Purchaser, whether affiliated as a limited partner or otherwise, to obtain through the Purchaser any of the following with respect to the Company: (i) access to any “material nonpublic technical information” (as defined in the DPA) in the possession of the Company; (ii) membership or observer rights on the Board of Directors or equivalent governing body of the Company or the right to nominate an individual to a position on the Board of Directors or equivalent governing body of the Company; (iii) any involvement, other than through the voting of shares, in the substantive decision-making of the Company regarding (x) the use, development, acquisition, or release of any “critical technology” (as defined in the DPA), (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Company, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA); or (iv) “control” of the Company (as defined in the DPA).]

It's a major advantage for the fund manager to be located in the target geography of their portfolio because it allows for much faster response time, it enables them to win competitive investments and it allows them to develop the necess...

It's a major advantage for the fund manager to be located in the target geography of their portfolio because it allows for much faster response time, it enables them to win competitive investments and it allows them to develop the necessary network to succeed. 

Europe, in general, is not a good place to setup a fund. As a result, most new managers in the region setup their funds in Delaware and you can learn more information on this topic here. 

Europe, in general, is not a good place to setup a fund. As a result, most new managers in the region setup their funds in Delaware and you can learn more information on this topic here. 

This is an impossible question to answer because LP objections are dependent on the manager's thesis and the LP archetype. Unless 1 in 5 LPs sign a PACT, a manager's thesis needs improvement. 

This is an impossible question to answer because LP objections are dependent on the manager's thesis and the LP archetype. Unless 1 in 5 LPs sign a PACT, a manager's thesis needs improvement. 

Read the following articles: https://govclab.com/2023/04/27/lp-archetypes/ https://govclab.com/the-venture-capitalists-guide-to-limited-partners/

Read the following articles: https://govclab.com/2023/04/27/lp-archetypes/ https://govclab.com/the-venture-capitalists-guide-to-limited-partners/

There are lots of funds with an Impact thesis that are over-performing while others under perform. They follow a Pareto distribution for returns just like all other funds.

There are lots of funds with an Impact thesis that are over-performing while others under perform. They follow a Pareto distribution for returns just like all other funds.

There is little impact to Venture Capital from alternative investment models. 

There is little impact to Venture Capital from alternative investment models. 

No - generally speaking, a fund manager should not register any entities until ready to start closing the Fund. Entities set up asynchronously with the complete fund structure will at minimum require additional diligence/paperwork, and i...

No - generally speaking, a fund manager should not register any entities until ready to start closing the Fund. Entities set up asynchronously with the complete fund structure will at minimum require additional diligence/paperwork, and in most cases it is easier/cheaper to discard them than to re-use them.  Depending on the domicile, there may be a way to "reserve" the entity name if desired - for example this is possible with the Delaware Secretary of State directly (at an additional cost). However note that these reservations are usually time-limited, and will need to be "released" in order to actually use the reserved name. 

The Domicile of the fund is absolutely critical. It affects a number of factors such as operational costs, tax, investments, limited partners etc.. Read the following articles: Domicile Report https://govclab.com/2021/09/25/venture-cap...

The Domicile of the fund is absolutely critical. It affects a number of factors such as operational costs, tax, investments, limited partners etc.. Read the following articles: Domicile Report https://govclab.com/2021/09/25/venture-capital-domicile-report-by-vc-lab/ Delaware is the VC Domicile of Choice: https://govclab.com/2023/06/10/delaware-is-the-vc-domicile-of-choice/

A common approach is for you to request the data room from the company and do your diligence from their systems. Another approach is to customize your Investment Inquiries form. It allows for document uploads etc..

A common approach is for you to request the data room from the company and do your diligence from their systems. Another approach is to customize your Investment Inquiries form. It allows for document uploads etc..

Read this article: https://govclab.com/2021/10/28/venture-capital-roles/ 1. It's VERY difficult to become a GP in a fund, even for those who are experienced investors. It's typically easier to start a Firm then to join one at as a GP wh...

Read this article: https://govclab.com/2021/10/28/venture-capital-roles/ 1. It's VERY difficult to become a GP in a fund, even for those who are experienced investors. It's typically easier to start a Firm then to join one at as a GP which is a very senior role. Some, firms do have a career trajectory for junior people. But even for those firms, this typically takes 10-15 years to ascend to GP role if everything goes well. 2. Venture Partners are part time roles. These are typically reserved for part-time team members who can provide strategic, operating and portfolio support. Venture Partners are typically experts in a field like souring, domain, limited partners etc... 3. Operating Partner / COO at VC Firm - The vast majority of VCs don't have this role because they are too small. However, there are several enduring large firms with a high AUM, where this role is necessary. There are several ways to get experience for this role: 1. Join a company that managers operations for lots of VC Firms, like Decile Group 2. Join a new or emerging firm at an entry level role and learn the business together with the firm. 3. Join an accelerator like Venture Institute to rapidly develop the foundational skills.

Venture capitalists add value to startups in multiple ways beyond just providing capital. They offer strategic guidance, share industry expertise, and leverage their networks to help startups forge new partnerships and identify potential...

Venture capitalists add value to startups in multiple ways beyond just providing capital. They offer strategic guidance, share industry expertise, and leverage their networks to help startups forge new partnerships and identify potential customers. Additionally, VCs can assist with hiring, as they often have access to an extensive pool of talented professionals. Additional reading: https://govclab.com/2021/11/19/the-venture-industry-explained/ https://govclab.com/2023/06/14/the-role-of-venture-capital/

General Partner (GP): In the context of venture capital funds, the general partner is the fund manager responsible for making investment decisions, managing portfolio companies, and overseeing the fund’s operations. GPs typically receive...

General Partner (GP): In the context of venture capital funds, the general partner is the fund manager responsible for making investment decisions, managing portfolio companies, and overseeing the fund’s operations. GPs typically receive management fees and a share of the fund’s profits (carried interest) as compensation for their services. Limited Partner (LP): An investor in a venture capital fund who contributes capital but does not participate in the fund’s management or investment decision-making process. Limited partners have limited liability, meaning their financial exposure is restricted to the amount of capital they have committed to the fund. They share in the fund’s profits in proportion to their investment, after the deduction of management fees and carried interest. You can find more info here: https://govclab.com/2023/04/26/how-to-invest-in-vc/

30% of new managers are former Founders or CEOs according to VC Lab's most recent report. You can find more information here: https://govclab.com/2023/02/17/nextgen-manager-report/

30% of new managers are former Founders or CEOs according to VC Lab's most recent report. You can find more information here: https://govclab.com/2023/02/17/nextgen-manager-report/

You can get sued for anything, especially if you reside in a litigious country or domicile. Typically, it's best to try to avoid combinations if the names are very common because other parties may raise trademark concerns.

You can get sued for anything, especially if you reside in a litigious country or domicile. Typically, it's best to try to avoid combinations if the names are very common because other parties may raise trademark concerns.

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