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Thesis & Presentation

1. Can Funds Raised Cover Legal and Formation Costs Outside the 2% Management Fee?2. What's the Ideal Allocation Distribution for Pre-Seed Investments with 80% Failure, 10% 1x Return, and 10% 25x Return?

Asked by:
Community Member
Edited by:
Long Pham
on July 8, 2023
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May 03, 2023
Two quick questions 1. Are we able to use funds raised to pay for lawyers fund formation costs etc as a separate cost not associated with the 2% management fee? 2. What is the right distribution for our allocation/fund economics slides i.e. 80% will fail 10% will return 1x and another 10% giving us a 25x (all preseed investments)?
1 answer
Mike Suprovici
Accepted Answer
May 03, 2023
1. Yes most LPAs have a carve out for formation 2. It really depends on your strategy. Either way you should consider showing 3 scenarios (high, medium, low)

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