Ask AI

All Questions

1,407
0

Is it fair to consider a markup in non-priced rounds with different SAFE caps?

Hi everyone. About markups... what's the best practice for non-priced rounds? For example I invest using a SAFE with a $5M Cap and a few weeks later another investor comes in at a $10M Cap. Is it 'fair' to say there was a markup? Or is it necessary to wait until the priced round?

Top answer:

Yes, you can call that markup

 -  Mike Suprovici
0
0

How Much Capital Can Be Deployed from First Close Investors Before the Second Close in a Fund?

I’ve been speaking to a few potential LPs and a question came up that I was hoping someone could answer. How much of the “first close investors” capital can be deployed before the second close? For example if I had a $10M fund target with a first close of $2M am I able to call and deploy that full $2M before raising the remaining $8M? And even if I’m legally able to do so under the terms of a LPA would this be considered off-market? Thanks in advance.

Top answer:

No - a fund manager cannot call and deploy 100% of the capital from a first close before going on to raise the rest of the Fund. This would likely be fatal for the Fund - all limited partners must be on the same capital call schedule.  ...

1

What is the typical dollars ticket size VCLab considers for seed and series A? Thanks

What is the typical dollars ticket size VCLab considers for seed and series A? Thanks

Top answer:

This is market specific. Here are some VERY general #s of what we have seen: In developed markets, it’s not uncommon for Series A tickets to be $5m+ In emerging markets, Series A tickets tend to be $2m+.

 -  Mike Suprovici
1
0

What is the Ideal Portfolio Size for a €5 Million Fund Managed by a Solo GP: 15-20 or 20-25 Investments?

Regarding optimal portfolio size do you have any references you can share? For example for a EUR 5 million fund run by a solo GP what would be your suggestion for the number of companies invested? 15-20? 20-25? 25-30? I am thinking of 15-20 investments to have the 'attention span' required to help them grow max 20-25 but would like your input

Top answer:

The size very stage specific. At seed average is 20-25. At pre-seed it’s more. At Series-A you can do less.

 -  Mike Suprovici
0
0

What are the mechanics of 'per deal carry' for Venture Partners when the fund hasn't generated enough returns?

What are the mechanics for 'per deal carry' for Venture Partners? Specifically if the whole fund has not generated sufficient returns to pay a carry does the GP pay for the per deal carry if an exit occurs?

Top answer:

Deal by deal carry, which is not recommended, is an arrangement where the fund grants an individual, usually a venture partner, a share in the upside generated by the performance of one or more deals allocated to that individual. This is...

0

How Can a Solo GP Best Tackle the Key-Person Clause: Is Strong IC the Solution?

One question getting asked as a solo GP is how to tackle the key-person clause. What's the best way to tackle this? Strong IC?

Top answer:

This will be handled in the LPA. Here is how the Cornerstone manages it for your reference: However, you should simply reply by saying: This will be handled by the LPA and we will work on it together with LPs once we secure the necessa...

0

Is There a Maximum Limit on Venture Partners for Optimal Sub-Sector Expertise in a Fund?

Is there a maximum limit on the number of Venture Partners a fund should have? I am thinking of pulling in different sub-sector experts to work with portfolio companies.

Top answer:

I recommend between 2 and 5. We have seen some funds that have dozens, but they need to be owners in the general partnership, so this can be a burden.

 - 
Community Member
0
0

Is Using My Last Name for a Management Company Lame or Should I Choose a More Abstract Name?

Is it lame to use my last name for the management company instead of something more abstract? (My last name is not Andreessen)

Top answer:

Generally, the fund, the GP and the ManCo all share the same name, such as: Orange Capital Fund I, LLC Orange Capital GP I, LLC Orange Capital, LLC

 - 
Community Member
0
1

Does FounderInstitute Offer a Forum or Email Board for Alumni Entrepreneurs to Discuss SaaS and Financial Tools?

Does FounderInstitute have a forum or email message board that we're allowed to browse/ask questions in for its alumni entrepreneurs? I have a general entrepreneurship question (about what the best software is for SaaS companies who want financial dashboard/charting that integrates with QuickBooks) and figured that would be a great place to look.

Top answer:

We do not, however, I’m happy to share in our Alumni Slack channel for you. Send me your question and I’ll post it for you.

 -  Mike Suprovici
1
0

Should a First-Time Fund Manager Start a Micro VC under Another Fund and How to Approach Potential LPs?

Hi everyone! I hope you’re doing well! I had two questions: 1. As a first time fund manager what do you think of me starting my fund under another funds wings? Essentially starting a micro VC under someone else’s current VC to share the resources with them as well and save on costs. 2. Would Angel investors be potential LPs? What is the best way to approach an LP? Directly ask them if they would invest or warm them up over a period of time? Thank you so much!

Top answer:

1. Please DO NOT do this. It’s a 10+ year investment!!! 2. Yes, most of your 1st close will likely be HNWs/Angels

 -  Mike Suprovici
0
0

Is it possible to set up a crypto wallet for a Fund? If so which provider(s) are good?

Top answer:

It’s very difficult, if not downright impossible, to receive LP commitments via crypto. Your LPs will need to cash out and then make their LP commitments in fiat. 

 -  Mike Suprovici
0
1

What is Exhibit A in a SAFE Agreement and Can I Indicate Myself Instead of a Fund Entity?

Topic: SAFE agreement/ Allocation () Hi All. I'm talking to a couple of startups about their openness in saving a position in their upcoming round for my fund... However 2 questions come to mind -- 1) What is Exhibit A here in the document? 2) Does this mean I need to have the fund entity established (not yet existing today) or could I indicate myself in place of the entity? Thanks for the guidance!

Top answer:

This is basically an LOI developed by one of our Alumni who will join us on Wednesday’s webinar. 1. The SAFE that you can find online 2. No. But you will need to be pretty close to closing to use this strategy…

 -  Mike Suprovici
1
0

How to Implement Warehousing Deals with Markup at Cost without Gifting Profits to LPs?

On warehousing deals with markup. I heard on the last AMA that it is advisable to bring the marked up deals to the fund at cost. I'm trying to understand how to make it work. Let's say I have invested $20k into a company last year and now it's worth $60k. If I put this in the fund at cost does it mean that I am gifting 80% of $40k to the LPs right away?

Top answer:

yes it does

 -  Mike Suprovici
0
0

Can an LP Increase Their Commitment After Signing a PACT or Wiring Initial Capital?

How would it work if an LP wants to up their commitment after they already signed a PACT? or may be after they already wired money for the first capital call?

Top answer:

Yes they can and this is very common. They can sign an LPA for a larger amount on closing. Happens all the time.

 -  Mike Suprovici
0