Venture Legal

No, it doesn't work like this. Assume carry is 100%, irrespective of fund size. When you give carry to a VP, it's a % of 100%. So, if you decided to give a VP 5% it will be 5% of 100% of the carry. This has nothing to do with the fund si...

No, it doesn't work like this. Assume carry is 100%, irrespective of fund size. When you give carry to a VP, it's a % of 100%. So, if you decided to give a VP 5% it will be 5% of 100% of the carry. This has nothing to do with the fund size.  Also, the extreme example that you have above is unrealistic. It's common for funds to over-subscribe the target stated on the LPA, but it's not common for funds to over-subscribe by that much nor will LPs be ok with you doing this because it drastically changes their return profile.  So, in practice, it's normal for people to maybe over-subscribe by 50% - 200%, but not 500%.  In the event that you truly had that much more demand from LPs, you would close a Fund 1 and move the rest of the demand into Fund 2.

He can disclose that he is advising your new firm and the time commitment that he will dedicate.

He can disclose that he is advising your new firm and the time commitment that he will dedicate.

A manager may decide to set up a “Parallel Fund” in order to accommodate the needs of certain limited partners that have tax, regulatory or other issues in investing in the primary fund.  For example, a non U.S. limited partner may want...

A manager may decide to set up a “Parallel Fund” in order to accommodate the needs of certain limited partners that have tax, regulatory or other issues in investing in the primary fund.  For example, a non U.S. limited partner may want to take advantage of a certain tax treaty available to them by investing in a Parallel Fund. The Parallel Fund would be set up in a different jurisdiction and would make the same investments as the primary fund, subject to certain exceptions given the issues necessitating the need for the parallel structure.   The Cornerstone includes an optional provision that allows for the manager to set up such a Parallel Fund to accommodate legal, tax, or regulatory considerations of certain investors subject to the requirement that the manager treat all investors in a fair manner as further described in the Cornerstone.   Obviously, a manager should evaluate the costs and administrative burden prior to setting up any Parallel Fund.

The Cayman Islands is an expensive and slow domicile, so it is not recommended to set up funds in the Caymans. A less expensive, less regulated, but also slow domicile is BVI, and Decile Partners can work to set a fund up there. Assume t...

The Cayman Islands is an expensive and slow domicile, so it is not recommended to set up funds in the Caymans. A less expensive, less regulated, but also slow domicile is BVI, and Decile Partners can work to set a fund up there. Assume that it will take four to six months to set up, and assume that you need a $10 MM or greater fund size to cover the various setup fees and annual fund administration expenses.

Generally speaking, a Fund should not enter into a Venture Partner agreement with a company, unless the company is wholly owned by one individual. Services provided to a Fund are typically very personal and delegation is usually unwant...

Generally speaking, a Fund should not enter into a Venture Partner agreement with a company, unless the company is wholly owned by one individual. Services provided to a Fund are typically very personal and delegation is usually unwanted. Attempting to do this also creates additional legal, securities law, and tax complexities.  It is far easier for the Fund to enter into an individual agreement with each relevant person within a company or other type of organization. 

Limited Partners (LPs) are generally not issued units, shares, or any equivalents for their investment into a VC Fund - this is a common misconception. LPs simply own a percentage of the limited partnership's interests.  By design, the...

Limited Partners (LPs) are generally not issued units, shares, or any equivalents for their investment into a VC Fund - this is a common misconception. LPs simply own a percentage of the limited partnership's interests.  By design, the structure of VC Funds makes it very difficult for LPs to pull their money out until there are liquidity events (exits). This is because the capital is directly invested in private companies - money is returned to LPs usually when one of those companies undergoes a liquidity event (acquisition, IPO, etc.). 

Generally speaking, no - but it's complicated. Every country has it's own securities regulations regime (which may also interact with other countries' regimes), and nearly every one imposes restrictions, exemptions, etc. on crowd funding...

Generally speaking, no - but it's complicated. Every country has it's own securities regulations regime (which may also interact with other countries' regimes), and nearly every one imposes restrictions, exemptions, etc. on crowd funding (assuming here that you are referring to general solicitation). For example, you can learn more about 506(c) here (for the USA): https://www.decilehub.com/base/17-fund-operations/1782-what-is-this-506-c-thing-i-keep-hearing-about-should-i-do-it Should you have additional questions regarding your specific domicile and circumstances, we strongly recommend that you consult an experienced attorney who can best advise you. Securities regulations are (depending on the jurisdiction) stringently enforced and can lead to sub-optimal consequences if violated. 

European GPs (General Partners) looking to fundraise in Europe, even with the domicile of the fund in Delaware, face a complex regulatory environment. When pitching EU limited partners before the fund is launched, manager must adhere to ...

European GPs (General Partners) looking to fundraise in Europe, even with the domicile of the fund in Delaware, face a complex regulatory environment. When pitching EU limited partners before the fund is launched, manager must adhere to the Alternative Investment Fund Managers Directive (AIFMD), which regulates pre-marketing activities. A key pre-marketing strategy in the EU is reverse solicitation.  Reverse solicitation in the EU context requires that the initial request for materials be made by the investor or limited partner, without the manager explicitly pitching the fund. The fund manager must document this investor-initiated contact and limit their response to the specific request of the investor. For example, a prospective limited partner may ask the manager if they are launching a fund, and then the manager can share fund-related information. EU fund managers often domicile their funds in the US for a more favorable regulatory framework. If a manager chooses to domicile in the EU, they must either obtain the European Venture Capital Funds (EUVECA) designation or adhere to the individual laws of EU member states where they have limited partners. Due to high regulatory and compliance costs in the EU, it does not make sense to place a fund in the EU that is less than $15 MM in size. Additionally, it can take over a year to get the basic approvals and licenses. See: https://govclab.com/2023/12/14/eu-fundraising-for-new-managers/

By law, all offers and sales of securities within the United States must be either: • registered with the Securities and Exchange Commission (the SEC); or • issued relying on an available exemption from such registration. Generally spea...

By law, all offers and sales of securities within the United States must be either: • registered with the Securities and Exchange Commission (the SEC); or • issued relying on an available exemption from such registration. Generally speaking, "public" type offerings (for example an IPO) must be registered (such as any stocks publicly trading on the Dow Jones or NASDAQ) - this is a long and complex process. When startups raise capital through private markets, i.e. raising from venture capital funds, the offerings are private by definition ("unregistered"). Therefore, they rely on an exemption from registration. • As startups almost universally (when fundraising from venture capital funds) issue unregistered securities, there are no specific legal considerations or potential risks to take into account other than the risks associated with investing into startups in general. • Startups typically work with counsel to issue securities, who usually shoulder the burden of ensuring compliance for exemptions from registration. *Please consult experienced local counsel if you have questions pertaining to securities issued in other jurisdictions.

UPDATE: February 5, 2024 Cornerstone version 3 is available to download from VC lab here.

UPDATE: February 5, 2024 Cornerstone version 3 is available to download from VC lab here.

Non-Investments are assets of the Fund that are not tied to Investments (ie investments in portfolio companies or cash equivalents).  For example, the Fund may have proceeds from a litigation that is unrelated to an investment.

Non-Investments are assets of the Fund that are not tied to Investments (ie investments in portfolio companies or cash equivalents).  For example, the Fund may have proceeds from a litigation that is unrelated to an investment.

In the US, offerings of securities must be registered with the SEC or made pursuant to an exemption from registration. Regulation S provides an exemption for issuers to offer and sell securities in offshore transactions.  Regulation S ha...

In the US, offerings of securities must be registered with the SEC or made pursuant to an exemption from registration. Regulation S provides an exemption for issuers to offer and sell securities in offshore transactions.  Regulation S has two general conditions: (i) the offer or sale must be made in an offshore transaction; and (ii) there are no “directed selling efforts” – activity which could have the effect of conditioning the market in the United States.  VC funds can consider whether a certain offering of its fund interests outside the US can qualify for exemption under Regulation S.  VC funds should consult counsel to determine whether an offering qualifies for the Regulation S exemption and whether the offering complies with the laws of the overseas jurisdiction where the offering takes place.

For the General Partner to unilaterally decide to wind up a fund is an edge-case - there aren't "typical" types of cases to speak of here. However as one example, a pending SEC investigation (which could implicate the General Partner) co...

For the General Partner to unilaterally decide to wind up a fund is an edge-case - there aren't "typical" types of cases to speak of here. However as one example, a pending SEC investigation (which could implicate the General Partner) could be one of the causes for a General Partner to make such a decision.  While it's an edge-case, should a General Partner choose to go this route, they would be obligated to liquidate the Fund's assets and distribute the the proceeds to Limited Partners (see Cornerstone 6.3) - so it generally isn't considered "too risky" for the asset class.  It is not industry standard for LPs to need to approve of such a decision by the General Partner - however per the Cornerstone a majority of the LPs can also put the Fund into limited operations mode. 

It's not uncommon for LPs to take advisory roles in some portfolio companies. In addition, many LPs are often offered direct investment opportunities in follow-on or pro-rata opportunities. 

It's not uncommon for LPs to take advisory roles in some portfolio companies. In addition, many LPs are often offered direct investment opportunities in follow-on or pro-rata opportunities. 

Ontario is an internationally recognized domicile. Alberta, BC and Quebec may make sense if all LPs and investments are from that region. Otherwise, Ontario is the recommended domicile because it's a hub. This means that there is a good ...

Ontario is an internationally recognized domicile. Alberta, BC and Quebec may make sense if all LPs and investments are from that region. Otherwise, Ontario is the recommended domicile because it's a hub. This means that there is a good market of experienced and specialized service providers, unlike the other provinces. 

See the diagram below: [Canada Cornerstone Structure.png]

See the diagram below: [Canada Cornerstone Structure.png]

Here are the main considerations: 1. Venture funds can't receive advisory shares. So, if the founder makes you an advisor, you can't transfer that ownership to the fund. 2. If you are an advisor or consultant, that will be a conflict of...

Here are the main considerations: 1. Venture funds can't receive advisory shares. So, if the founder makes you an advisor, you can't transfer that ownership to the fund. 2. If you are an advisor or consultant, that will be a conflict of interest with your fund. 

A template Stewardship Agreement is available below: https://docs.google.com/document/d/1_wo2K7adTcEjARB3AgoPzW_PC8XHIUH7GrMTvutDsMQ/edit

A template Stewardship Agreement is available below: https://docs.google.com/document/d/1_wo2K7adTcEjARB3AgoPzW_PC8XHIUH7GrMTvutDsMQ/edit

Decile Group strongly recommends not accepting any investors who are not accredited investors into a Fund, even if it is technically and legally possible (depending on the jurisdiction and the Fund's legal agreements). Such investors are...

Decile Group strongly recommends not accepting any investors who are not accredited investors into a Fund, even if it is technically and legally possible (depending on the jurisdiction and the Fund's legal agreements). Such investors are generally not worth the extra effort and cost.  For specific advice about a jurisdiction, please consult an experienced fund attorney in said jurisdiction. 

“The identity of the LPAC members will be disclosed to all the investors of the fund. Disclosure happens as part of the process of providing notice to investors of changes or approvals that have been made.”

“The identity of the LPAC members will be disclosed to all the investors of the fund. Disclosure happens as part of the process of providing notice to investors of changes or approvals that have been made.”

As a manager, you need to get to know every potential limited partner before you pitch them, including doing research to understand if they are accredited. At the ned of the day, you need to use your best judgement. This is governed by g...

As a manager, you need to get to know every potential limited partner before you pitch them, including doing research to understand if they are accredited. At the ned of the day, you need to use your best judgement. This is governed by general solicitation regulations, which are explained below: https://govclab.com/2022/06/28/general-solicitation/

The PACT is a non-binding agreement, and, before any entities are formed, the jurisdiction does not matter, since there is no underlying entity to bind the agreement to. In general, it can be any jurisdiction, as the agreement is non-bin...

The PACT is a non-binding agreement, and, before any entities are formed, the jurisdiction does not matter, since there is no underlying entity to bind the agreement to. In general, it can be any jurisdiction, as the agreement is non-binding.

Question: With respect to financing documents, what does an early-stage VC need to do at the time of a an Equity Financing (aka Preferred Stock Financing), if said VC invested earlier in a typical SAFE note? A standard, unaltered Y Com...

Question: With respect to financing documents, what does an early-stage VC need to do at the time of a an Equity Financing (aka Preferred Stock Financing), if said VC invested earlier in a typical SAFE note? A standard, unaltered Y Combinator SAFE in 2023 contains language such as the following (please review variations published by Y Combinator for exact phrasing): "In connection with the automatic conversion of this Safe into shares of Standard Preferred Stock or Safe Preferred Stock, the Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing; provided, that such documents (i) are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and (ii) have customary exceptions to any drag-along applicable to the Investor, including (without limitation) limited representations, warranties, liability and indemnification obligations for the Investor." Answer: *Typically, during an Equity Financing, the Company (the portfolio company), will retain a law firm, which will be responsible for coordinating/distributing documents and requesting signatures as needed. **SAFE investors typically sign a subset of the Equity Financing documents.  Generally a VC in similar circumstances will need to: • Review the Preferred Stock Purchase Agreement and accompanying documents (with the assistance of its own counsel, which is usually recommended) to ensure its SAFE is converting correctly and as intended; • Sign the final financing documents (or subset thereof) as distributed by the portfolio company's law firm; • Receive and retain a final, fully executed set of closing documents for the Preferred Stock Financing.

Yes - however in doing so, the limited partner will generally lose their "limited" status with respect to liability, because they may wield influence over the Fund's decision-making processes. They may become liable for any actions taken...

Yes - however in doing so, the limited partner will generally lose their "limited" status with respect to liability, because they may wield influence over the Fund's decision-making processes. They may become liable for any actions taken by the General Partner of the fund that have potentially adverse implications for the Fund's limited partners.

Yes, a Delaware LP is a pass through entity. 

Yes, a Delaware LP is a pass through entity. 

Generally speaking, the best setups for a prospective fund manager to warehouse deals are: • Individually (no one else involved); or • Via a 100% wholly-owned entity.  The other types of setups you are referring to generally are not opt...

Generally speaking, the best setups for a prospective fund manager to warehouse deals are: • Individually (no one else involved); or • Via a 100% wholly-owned entity.  The other types of setups you are referring to generally are not options. Complicated legal setups are not recommended, and platforms where the fund manager does not outright own the rights to an investment are not viable either. TL:DR - keep things simple. 

Please go here to see the open source Venture Partner Share Agreement Template we published: https://govclab.com/2022/03/10/venture-share/

Please go here to see the open source Venture Partner Share Agreement Template we published: https://govclab.com/2022/03/10/venture-share/

Sydecar is not an option for VC firms. So don't waste any time on this matter until at least $1m US is hard circled via PACTs. This is one of the last decisions that a fund manager should make.  That being said, since you seem to be a C...

Sydecar is not an option for VC firms. So don't waste any time on this matter until at least $1m US is hard circled via PACTs. This is one of the last decisions that a fund manager should make.  That being said, since you seem to be a Canadian citizen, it will be much more beneficial for you to be domiciled in Ontario. 

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. 

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/

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.

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. 

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. 

From the legal perspective, ending the relationship with a general partner is governed by the management company agreement and the general partner agreement, as well as any other related agreements, such as an employment agreement or the...

From the legal perspective, ending the relationship with a general partner is governed by the management company agreement and the general partner agreement, as well as any other related agreements, such as an employment agreement or the LPA. This legal complexity makes separations difficult and expensive. As a result, the best strategy is to have all parties agree on the separation amicably and have a sense of the terms for the separation before involving legal counsel. The common outcome of a separation is to remove any equity holding of the departing general partner in the management company and to negotiate how to handle any allocated carried interest. It is also important to negotiate any involvement by the departing general partner in ongoing operations, including portfolio support, and what the mutual messaging will be to the different stakeholders, often involving the exact wording.

Running a fund and an AngelList syndicate at the same time presents a number of problems.  First, most LPAs prevent managers from working on multiple funds at the same time because managers have fiduciary duties to their limited partner...

Running a fund and an AngelList syndicate at the same time presents a number of problems.  First, most LPAs prevent managers from working on multiple funds at the same time because managers have fiduciary duties to their limited partners, such as the duty of care to act prudently, prioritizing beneficiaries' interests. Second, there are conflicts of interest around investment decisions that arise from having two funds in one focus area, since a manager may choose to cherry pick deals or feel pressure to invest in deals with companies that are failing to save the company.  Third, there are issues around the time and attention that a manager must place on the respective funds that detract from time and attention required for the the other fund, such as when diligencing deals, working on reports, or managing operations.  These various problems can be overcome by disclosing everything to limited partners up front, having a limited partner advisory committee to clear conflicts, and providing full transparency during operations, but this can be time consuming and difficult for a manager to do, and may also make limited partners skeptical. 

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. ”

DO NOT INCORPORATE ANYTHING. Stop now. This is a major waste of time and effort. You need a minimum of 10%+ hard circled via PACTs to begin a formation process. Then, you need to work with super specialized VC formation attorneys to get ...

DO NOT INCORPORATE ANYTHING. Stop now. This is a major waste of time and effort. You need a minimum of 10%+ hard circled via PACTs to begin a formation process. Then, you need to work with super specialized VC formation attorneys to get this done and the only viable place is Delaware.  Your law firm must incorporate all 3 entities at the same time and also create all the operating agreements. Decile Launch includes all 3 entities and the operating agreements: ManCo, GP & LP.  With respect to tax, don't provide tax advice to your LPs. This is for your reference only. LLCs are flow through entities. Tax burdens are created when money is distributed to your LPs and they must pay it on their personal returns. Capital gains are not sourced to a specific location. They are taxed in the jurisdiction of the ultimate beneficiary. 

Most LPAs have an 'investment period' clause and 'successor fund threshold' to provide alignment around expectations. If you're planning on deploying significantly faster then the investment period, then you should clear this with your L...

Most LPAs have an 'investment period' clause and 'successor fund threshold' to provide alignment around expectations. If you're planning on deploying significantly faster then the investment period, then you should clear this with your LPAC at a very minimum because it affects the return profile and the potential temporal diversification of the fund. 

Reverse solicitation occurs when an investor reaches out to you first to request fund information. Many jurisdictions have a reverse solicitation safe harbour exemption that says if an investor reaches out to you first to request informa...

Reverse solicitation occurs when an investor reaches out to you first to request fund information. Many jurisdictions have a reverse solicitation safe harbour exemption that says if an investor reaches out to you first to request information regarding the fund offering then you do not have to register the fund offering in the jurisdiction. Reverse solicitation is fact-based, so in order to rely on any reverse solicitation safe harbour you need to be able to prove (with email or text evidence) that you did not market the fund to any investor without them requesting fund information first.

The Cornerstone Agreement provides that the general partner is prohibited in engaging in conduct which could constitute a conflict of interest without Approval.  See the Conflict of Interest and Successor Fund provisions which prohibit a...

The Cornerstone Agreement provides that the general partner is prohibited in engaging in conduct which could constitute a conflict of interest without Approval.  See the Conflict of Interest and Successor Fund provisions which prohibit activities that could potentially compete with the fund.

Venture capital funds are typically formed as limited partnerships which have general partners and limited partners. In a  limited partnership, the general partner faces unlimited liability while the liability of the limited partners is ...

Venture capital funds are typically formed as limited partnerships which have general partners and limited partners. In a  limited partnership, the general partner faces unlimited liability while the liability of the limited partners is limited to the amount of their investment.  For example, if the fund is has debts or is sued or incurs liabilities, the limited partners will not be subject to paying for the fund's liabilities while the general partner will face exposure to such debts and liabilities.

Indemnification provides certain protection for a party by contract.  For example, in the Cornerstone, the General Partner is indemnified by the Fund for its services in connection with the Fund provided that the General Partner acted in...

Indemnification provides certain protection for a party by contract.  For example, in the Cornerstone, the General Partner is indemnified by the Fund for its services in connection with the Fund provided that the General Partner acted in good faith and in the best interests of the Fund and such actions did not constitute Malfeasance.  The indemnification means that the fund will pay for damages as well as legal and other expenses suffered by the general partner in connection with the fund.

This does not have to be memorialized in any agreement. You can just offer the opportunity as they come up with an SPV. If an investor asks, you can offer a side letter for this right.

This does not have to be memorialized in any agreement. You can just offer the opportunity as they come up with an SPV. If an investor asks, you can offer a side letter for this right.

It would be extremely unusual for a fund to provide buy-back or redemption provisions in an investment agreement.

It would be extremely unusual for a fund to provide buy-back or redemption provisions in an investment agreement.