Fund Compliance

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Fund Compliance

What is the best procedure for offering deal flow directly to LPs? Not co-investments -- but good deals that don’t fit the fund thesis.

Asked by:
Community Member
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Feb 06, 2024

Decile Base’s answer goes into... set up an SPV, watch out for conflicts, be sure to offer to all LPs, use your LPAC. All good. But I’d like to know how to specifically avoid conflicts of interest while introducing LPs to a deal we passed on (no...

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Generally speaking, avoiding conflicts of interest when introducing LPs to a deal a Fund has passed on (and where such deal is not within the Fund's thesis), would be accomplished by following these best practices: • Set up the LPAC (thi...

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You must amend your Form ADV each year by filing an annual updating amendment within 90 days after the end of your fiscal year. For best practice, you should have you legal counsel file this amendment for the fund.

 -  Nicholas Bird
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Fund Compliance

template for cash control policy

Asked by:
Community Member
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Dec 09, 2023

Hello, we´re looking for templates for the following (couldn´t find any in Decile Base) policies: • Cash control • Privacy • Valuation • Cyber and info security • Code of ethics & personal trading • FCPA (anti-corruption & anti-bribery) • Politica...

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You will need to work with your law firm and fund admin service providers to attain those policies. That being said, VC Lab has developed a valuation policy template for the community. 

 -  Mike Suprovici
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Fund Compliance

Does an investors’ capital commitment change based on the completion of a capital call? Does the fund’s size (on the LPA) limit the maximum total capital investors can commit to the fund?

Asked by:
Community Member
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Dec 05, 2023

Question edited for clarity, and with respect to capital commitments and fund size terminology. 

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When a capital call is completed, an investor's total capital commitment does not change, but the portion of that investor's committed capital that has been paid into the fund has increased. The fund's size (as described on the LPA) does...

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Fund Compliance

what are level 1, 2, and 3 investments with regards to valuation policy?

Asked by:
Community Member
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Nov 28, 2023

"The Valuation Policy has been prepared in the context of FASB Accounting Standards Codification Topic 820 (“ASC 820”), “Fair Value Measurements and Disclosures,” which has been adopted by General Partner for the purposes of valuing the Portfolio ...

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Valuation policies take various approaches. Assuming that you are referring to the VC Lab Valuation Policy, SAFE or a Convertible Note investments will held at cost on the fund's financials until there is a priced round. Upon a priced ro...

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Fund Compliance

In August, the SEC passed new policy for transparency I believe, does this impact our firms?

Asked by:
Community Member
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Nov 21, 2023

Excited to join VC Lab in the accelerator, in my preparation I came across recent policy change at the SEC. Does this impact our proceedings at all? Is this something that is already baked into the curriculum with VC Lab. Feel free to just share a...

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The new SEC rules will impact new managers. You can learn more about those rules here: https://govclab.com/2023/08/25/sec-private-fund-adviser-reforms/  In summary: • All side letters will need to be disclosed to other Limited Partners (...

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Fund Compliance

Delaware exemptions and reporting requirement for 3(c)(1) fund advisors

Asked by:
Community Member
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Sep 19, 2023

I understand a 3(c)(1) Qualifying Venture Capital Fund with <$10M in assets and <250 beneficial owners is exempt from reporting and registering with the SEC. However, if the ManCo and GP/LP are all domiciled in Delaware, are there still state-leve...

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Generally speaking, a fund's domicile is not the same as the fund manager's (advisor's) place of business. It is very rare (I believe I have seen it once) for a fund manager to actually live/work in Delaware (thus potentially necessitati...

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“For the Anti Money Laundering portion of the review we are always looking for the underlying individuals. It means that if there are any entities that are owners with 25% or more interest in the LP entity, we will require the name(s) a...

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Fund Compliance

Fund of Funds LP Look-Through

Asked by:
Community Member
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Jul 26, 2023

How do Fund of Funds get around the SEC look-through rules for investment companies? Say a FoF has 30-40 LPs and is structured as an LLC, wouldn't the SEC look through the fund entity and count each of the FoF investors as an investor in the fund?...

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Generally speaking, venture funds do not structure themselves as LLCs - we typically see the following multi-entity structure for Delaware domiciled funds: • Management Company - LLC • General Partner entity - LLC • Fund - Limited Partne...

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As a general rule of thumb, fund managers avoid domiciling in the EU. Currently, the EU has a complex web of expensive and inefficient regulations that need to be adhered to, burdening fund managers with audits, fees, high taxes, regulat...

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Generally speaking, no - Fund Managers do not need to file an 83(b) election with respect to acquiring Shares in the ManCo or GP entity (via the ManCo). An 83(b) election is only required when acquiring Shares that are subject to vesting...

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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...

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Fund Compliance

Trademark / firm name check for BVI

Asked by:
Community Member
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Jul 14, 2023

For a crypto firm likely to domicile in BVI, is it recommended to validate the firm name by searching trademarks or similar business names registered only in BVI, or in other countries as well ?

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As a general rule, you should validate is the name or a substantially similar name is not being used anywhere for a business in a related field. So, you want to look for more than just a trademark in more locations than just BVI. To star...

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Fund Compliance

How to answer LP questions about GPs not being required to be registered with OSC

Asked by:
Community Member
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Jul 14, 2023

I've been told that raising from accredited Ontario Canada investors would subject GPs to the OSC regs. Do I need to register with OSC before launching the fund? I've been told if I am representing myself as a fund and making buy and sell decision...

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*For informational purposes only **Fund managers should avoid any activities which may be construed as providing or interpreting legal tax, or other advice to prospective limited partners.  Question: Does a Canadian fund manager need t...

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

 -  Mike Suprovici
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Fund Compliance

What is general solicitation?

Asked by:
Community Member
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May 03, 2023

What is general solicitation?

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General solicitation in venture capital refers to publicly advertising or promoting the opportunity to invest into a fund without a substantive pre-existing relationship and the knowledge that the individual is accredited. To avoid issue...

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Fund Compliance

Can an aspiring fund manager speak as an individual instead of on behalf of a Fund (being raised) at a conference or event?

Asked by:
Community Member
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May 03, 2023

We are invited to a DEI in tech conference as a speaker and the organizer is asking me to speak as the MP of Axent Ventures about immigrant founders. We read the rules about General Solicitation. Shall we totally avoid pronouncing Axent and speak ...

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Possibly yes - but be careful. A fund manager should avoid mentioning a fund or thesis until the fund has been fully raised and closed. https://govclab.com/2022/06/28/general-solicitation/

 -  Mike Suprovici
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Fund Compliance

Can a fund manager (of a fund) be a venture partner for another fund without creating a conflict of interest?

Asked by:
Community Member
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May 03, 2023

Can we be the fund managers of our own fund and VPs of another (eg. portfolio VPs who simply refer in deals) or is this a conflict of interest?

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The situation described is most likely a conflict of interest - but this doesn't guarantee it can't be done. Conflicts of interest are generally disclosed in a Fund's Limited Partner Agreement - and having any roles in other funds almost...

 - 
Community Member
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