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What happens if an LP wants to lower their commitment after signing the LPA?

Since it's possible to increase a position in a subsequent capital call (with a new LPA), is it also possible for an LP to request to reduce their commitment? If so, are there specific requirements for them to do so? How do you deal with that?

Top answer:

Generally speaking, increasing or decreasing an LP's capital commitment post-admittance is accomplished via a simple change agreement countersigned by all parties (a new LPA is not required). In the case of an increase, a "catch-up" ca...

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If I have a $10m fund size and I do a close on $1m, what is my fund size?

Top answer:

The amount of capital that you close on is your fund size, not your target. In other words, if you have a fund target of $10m and you do a 1st close on $1m, your fund size is $1m until you close on more capital. 

 -  Mike Suprovici
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How can I filter LPs in Hub based on their country of residence?

Top answer:

As of the end of 2024, you can not filter LPs based on country of residence or geography directly in the pipeline. However, you can Tag LPs based on their country or region, and then filter based on Tags. This is good functionality to ad...

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Where can I learn about step by step process if Cap table of ManCo needs to be changed/ modified (Add/ Edit) after a fund is set up ?

Top answer:

Cap table adjustments for the ManCo are managed by the firm’s legal counsel. There are no short cuts here because mistakes in this are have severe consequences and are often fatal. We dedicate significant time to cap-tables during Decil...

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Are VC and PE Funds exempted from BOI reporting?

BOI reporting is due by the end of this year (2024), and I can't remember if VC/PE funds are exempted from having to file.  Are all of the entities (e.g. ManCo, GP, and LP) exempted or do we have to file for all of them?  Thank you.

Top answer:

Generally speaking, venture fund advisors (management companies and the underlying individuals in the standard Decile structure, registered as Exempt Reporting Advisors) are exempt from BOI reporting so long as they 1) meet certain crite...

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Is there any situation where it’s acceptable to not perform AML/KYC on Limited Partners during a fund closing process?

Top answer:

TL'DR - No. All Limited Partners must go through an AML/KYC prior to being accepted into the fund during an proper institutional grade LP onboarding process. This is because banks perform significant compliance checks on onboarded LPs. W...

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What is a search fund?

What is a search fund and how does it work?

Top answer:

A search fund functions in a similar way to venture capital funds and PE funds where the fund manager raises capital from investors and deploys it into companies with the goal of creating a liquidity event. However, the execution of the ...

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PACT Agreement

Is there a reason the following brackets are in the base PACT agreement and can they be removed for a US fund? The undersigned understands that the Offering is being made without registration under any securities law in any jurisdiction, including the [Securities Act of 1933 (the “Securities Act”), as amended, or any securities law of any state of the United States], and is being made only to ["accredited investors" (as defined in the Securities Act)].

Top answer:

The brackets in the base PACT agreement are placeholders for jurisdiction-specific legal references.  The language in the bracket is suggested language. For example, if you're in the US or launching a fund in Delaware, you can remove the...

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How does Decile measure adherence to these ethical standards in a way that ensures accountability across the firms in its network, especially when market pressures favor rapid returns?

Top answer:

Decile Group promotes and adheres to the Mensarius Oath (https://decilegroup.com/mensarius-oath/). In general, the principles of the Oath are enforced by the community. When a member of the community feels that the Oath has been violated...

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How can VC professionals spot potential red flags when evaluating the “Business Model” of early-stage companies?

Top answer:

The business model of early stage startups is often a guess that gets refined by constant customer development. In this context, red flags are not knowing who the actual customer is, not being diligent with customer development, and not ...

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FAST Agreement and Advisory Shares

How does a Founder & CEO of a startup provide advisory share, when they don’t know how many shares there are each year?

Top answer:

Use the FAST Agreement for all advisory work (https://fi.co/fast). The agreement provides a compensation framework based on the stage of the startup and the level of assistance using a percentage of the total startup value, which is rele...

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Are evergreen funds recommended?

Are evergreen funds recommended as a potential fund option? Are these funds welcomed by the VC Lab accelerator program?

Top answer:

TL'DR - Don't do it. You will struggle to raise from professional LPs and it's incredibly difficult and expensive to execute an evergreen strategy in VC. As a result, the VC Lab accelerator does not support evergreen funds. It is not re...

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Is the management company of a VC firm considered a “regulated entity”, for banking purposes?

This is a question that comes up when filling out banking forms. How should the ManCo, GP and Fund entities be categorized when answering this question? The typical choices are: Yes, No, and “Pooled investment vehicle”

Top answer:

Typically, you select "Pooled Investment Vehicle" for the LP Entity (the fund)

 -  Mike Suprovici
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