Ask AI

All Questions

1,434
0

Is the ManCo Registered as a C-Corp, GPs as LLC/LLP, and the Fund as LLC for Fund Formation?

For fund formation is the ManCo registered as C-corp the GPs collectively register as LLC/LLP and the Fund registered as LLC?

Top answer:

Generally speaking for Delaware domiciled funds, the ManCo and GP entity are LLCs, and the fund itself is a Limited Partnership. The fund managers own the ManCo, which owns the majority of the GP entity. The Limited Partnership (where th...

0

How Long Can Partners Work on Fund Formation Without Compensation, Maintain Side Jobs, and Pay Themselves After the First Capital Call?

How long do partners have to work on fund formation without being compensated? Is it possible to have a side job during this period? Can you pay yourself after the first capital call?

Top answer:

You will pay yourself with the 1st capital call. It is possible to have a side job before you do the 1st capital call.

 -  Mike Suprovici
0
0

What Are the Various Approaches to Address Concerns About a Solo GP's Inability to Work on a Fund Due to Unforeseen Circumstances?

Solo GP issue: What are the different approaches folks have seen re: addressing questions about something happening to a GP that prevents them from working on the fund? This is both a due diligence matter and a legal/document question. (i.e. the proverbial what if you get hit by a bus planning?)

Top answer:

This is handled by LPAs by something called a Key Person Clause. You can see how the Cornerstone LPA handles this by searching the agreement for ‘Key Individuals’ and for ‘Limited Operations’ mode: But, basically, you can tell them ...

0

Does the Investment Period Start on the Day of Investment or the Beginning of Fund Life?

Does the Investment period starts on the day we invest in each su ? If we say 1 year (or 2 years) investment period: when does this year start? Beginning of fund life? Thanks

Top answer:

The active investment period of a fund starts when the fund is formed and closes.

 - 
Community Member
0
0

Is Startup Traction a Valid Thesis Metric and Which Datasets Best Showcase Accelerator Program Success?

Are startups traction a viable metrics to add to the thesis? If yes what datasets are best to show? They are startups that I supported through accelerator programs.

Top answer:

Exits, subsequent funding rounds and revenue growth are the best startup metrics for a Thesis in order.

 - 
Community Member
0
0

How to Showcase Venture Partner Track Records with Confidential Deals in Data Rooms?

Any tips for A. Positioning venture partner track records in data rooms and (relatedly) B. Articulating track records that include confidential deals? (I have a venture partner who does technical dev for a lot of well-known agtech co's but that work is largely confidential)

Top answer:

a. you do this in in the bios folder by including their CV which should highlight some of their achievements b. you redact the name of the companies

 -  Mike Suprovici
0
0

What is the Best Approach for Sharing Fund Slidedeck with Potential Referrals from Family Offices?

Had a call yesterday with a connector who offered to make referrals to a number of family offices he is currently working with. They are likely to be good quality/well targeted referrals. He asked me to send the fund slidedeck over so he could forward it to them. What should I do here? Just send the two page summary and hold the deck back. Or send the whole deck? Or a trimmed back version of it? It will be going to quite sophisticated potential LP's so I think maybe not a problem to send the whole thing? I can gate them with access to more detailed information (fund model deal memos data room etc) if things progress.

Top answer:

There are general solicitation issues, and the there are pitch control issue. First, your deck should never be sent without a document management system, like Decile Hub. From a general solicitation standpoint, this should not be done, t...

 - 
Community Member
0 Show more
0

Do Fund Managers Typically Include Gross or Net Returns in Returns and Liquidity Slides?

For returns and liquidity slides do fund managers usually include gross returns (after fees) or Net returns (after fees and 20% carry)?

Top answer:

Usually Net because it’s designed to give the LP a sense of what the return on their capital will be.

 -  Mike Suprovici
0
0

Do Recent Angel Deals Matter to LPs Despite Limited Traction Visibility and Do Deal Size or Number Matter?

Would showing angel deals done recently be helpful as part of a track record to share with LPs or not really since no traction will be visible in such a short span of time? And if yes would they also care about number or size of such deals?

Top answer:

Angel deals are great if you can show the companies are growing. LPs don’t care much about the # of deals. It’s how successful you were with investing in those deals.

 -  Mike Suprovici
0
0

Is there guidance on Carry Share and compensation for Venture Partners, Principals, and Associates?

I understand the Venture Partners are given a share of the carry. Is there a guidance document reg the carry share and/or compensation for Venture Partners Principals Associates etc.

Top answer:

Yes, please review this article: https://govclab.com/venture-share-2/

 -  Mike Suprovici
0
0

Do Universities Contributing to Org Expenses Without Being LPs Still Need to Sign a Pact?

If we have a university want to put money towards the fund but they can't be an LP they just want to put money towards org expenses do they still sign a pact?

Top answer:

There has to be a contractural relationship for you to receive money. They either need to invest in the Limited Partnership or the General Partnership.

 -  Mike Suprovici
0
0

Can I promote my fund on podcasts with crossing the boundaries of general solicitation?

I host 2 podcasts where I have both listeners and guests who could be LPs and/or part of our deal pipeline. What's the best way to communicate my 'fund to be' without crossing any boundaries?

Top answer:

TL:DR - it's difficult, and we always recommend erring on the side of following regulations. Read the following: https://govclab.com/2022/06/28/general-solicitation/ Here are a few things that you should avoid mentioning just to be saf...

0

What is the Valuation Method for GP Carry and Share Units, Considering 950,000 Class A and 50,000 Class V Shares in the Share Agreement?

How do we value the GP carry upfront and the unit of shares? I see footnotes of 950000 class A and 50000 Class V shares in the Share Agreement for the GP earlier shared for us to engage Venture Partners?

Top answer:

Please see the Venture Partner Agreement and the included footnotes on 409A. Class A shares are issued to managers and partners in the GP, and Class V are issued to investors in the GP. Venture Partners are traditionally issued Class A. ...

 - 
Community Member
0 Show more
0

What are the basics of LP term sheets and investor qualifications for first-time fundraisers?

I'm a first time fundraiser and I have some super basic questions: Is there a standard or basic term sheet for a LP? Is anyone who wants to invest considered an LP?

Top answer:

As you accelerate your pitching you will use a PACT to collect interest. Then after you have $1m+ or more collected in PACTs, your law firm will help you incorporate all the entities and governing docs. Then you will send LPs an LPA to s...

0

Is It Suitable to Ask LPs About Their Investment Focus and First-Time Fund Involvement?

Is it appropriate - as a conversation starter e.g. at a conference in 1:1 conversation - to ask an LP (Corporate Corporate VC HNWI or Family office) what their investment focus is and if they only make direct investments or also invest in first time funds (without speaking about the fund thesis to avoid public solicitation)? If they ask us we can then lead the conversation over to what we work on?

Top answer:

You should try to build some rapport before you discuss the topic. Then, the questions should be something like this: 1. Do you invest in new mangers? 2. How many have in invested in last year?

 -  Mike Suprovici
0
0

What are the Best Practices for Fund-Accelerator Partnerships and Retribution, Including Carried Interest and Management Fees?

Are there any best practices and/or industry standards on the relationship & retribution between a fund and its partnered accelerator - points of carried interest % of management fees especially?

Top answer:

There are none. Often you don't need to compensate the accelerator however. It's to their benefit if your fund invests in their companies

 -  Mike Suprovici
0
0

Are management fees calculated on committed capital or on called capital? I'm calling 25%.

Are management fees calculated on committed capital or on called capital? I'm calling 25%.

Top answer:

It all depends on what is spelled out within the legal documents, but most times, management fees are calculated on committed capital.

 -  Rob Del Prete
1