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Should We Seek Advice from Potential LPs and Connectors or Rely on Neutral Confidants for Thesis Testing?

When it comes to testing our thesis and asking for advice from confidants would you recommend these be people who are purely providing advice? Or could this be a way of engaging early on people who we think could either be LPs or Connectors and making them feel a part of the process?

Top answer:

It’s common for confidants to become LPs. Ideally, you speak with confidants that are HNW individuals.

 -  Mike Suprovici
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What is that software that benchmarks term sheets?

What is that software that benchmarks term sheets?

Top answer:

For SAFE rounds, in many cases the SAFE itself is the term sheet. For priced rounds, NVCA model documents include a term sheet https://nvca.org/model-legal-documents/ . The more standard deal documents are, the more streamlined and lower...

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What Are the Typical Growth Stages for Fund Exits in a Startup Studio, and Can They Occur as Early as Series A?

Which growth stages usually a fund can start doing exits and how early is that possible if you are a startup studio in order to consider exiting ventures? Can it be as early as series A?

Top answer:

Exits were possible as early as the Series A for total success stories through secondary transactions when the overall startup market was frothy. Frothy times are gone for the time being. Assume that you need to hold until the company i...

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Community Member
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Should Our Fund's Currency Be SEK or USD Considering the Majority of LPs and Investments?

Our fund is domiciled in Sweden (Currency SEK). 75-85% of LPs are in Sweden. But 95-100% of investments are in USD. Should we just have the fund currency be SEK or does it make more sense to still do a USD fund?

Top answer:

If 95%+ of investments are in dollars, keep it in dollars and talk with your bank about their capabilities on this matter.

 -  Mike Suprovici
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What is the Typical Role of Venture Partners in Fundraising and Managing LP Relationships?

What's the norm for venture partners helping with fundraising when it comes to the relationship with the LP? Are they expected to be the touchpoint with the LP (like an account owner in sales)? Or are they only providing the intro and then the GP handles the relationship? Probably case by case but what is your experience there?

Top answer:

Case by case. But, in general, you want to handle the relationship because the VP is part time and they may not be there long term.

 -  Mike Suprovici
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What Are the Do's and Don'ts of Inquiring About Investments in Company Y from Fund X?

Questions about attire: • Should I ask founders if fund X is investing in them? • Should I ask contacts at fund X if and and why they invest in company Y? What are the do's and don'ts?

Top answer:

It's generally not appropriate to ask if fund x is investing, but it is appropriate to ask if others are investing. However, most good founders will not disclose for the same reason you wouldn't disclose your LPs.

 -  Mike Suprovici
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What Extra Information Should Be Disclosed if an LP Exceeds 25% Threshold of Fund Size in Commitments?

Hello! Does anyone know what is the extra information that should be disclosed if an LP exceeds the 25% threshold of the fund size in commitments?

Top answer:

Everything is defined in the LPA. As a rule, you don’t want any one LP to own 25% or greater, otherwise they control the fund. You could build in custom protections. You can read a sample and simple LPA with the Cornerstone for some exa...

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Community Member
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How to Showcase Your Track Record with Confidential Deals and Influencer SPVs?

regarding this _'(Track Record) Examine your Track Record of Past Deals. First identify the top five Past Deals that you have either invested in or had a role in writing the name of the company and a few words describing the business. Next think back to exactly how you initially discovered each opportunity and write a sentence that describes how you sourced each Past Deal. Then quantify how each Past Deal will be attractive to Limited Partners by looking at how the company grew how the valuation increased or how much money was generated by the exit and write a sentence about how value was created at each Past Deal. Lastly reflect on how your actions increased the value created at each Past Deal and write a sentence on your Value Add for each business.'_ - if most of your deals have been through angellist syndicates which contain confidentiality rules that mean you can't name the businesses you've invested in through them plus one deal that you can name that was brought to you as part of an influencer SPV (e.g. given equity) how should you handle this?

Top answer:

You can't use deals done through SPVs as track record unless you sourced and led the syndicate. 

 -  Mike Suprovici
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Do We Need to Expose Our Entire Deal Flow to LPs, or Just Invested Deals, and What Are the Risks and Confidentiality Concerns?

As a part of reporting, do we (need to) 'expose' the entire deal flow (invested in or not) to LPs OR only the ones we have decided to invest in? Are there risks (such as them going direct) if we expose the entire deal flow to the LPs? How sensitive is this deal flow confidentiality topic to engage with LPs and VPs? Or it is pretty much an unwritten trust/relation? Are/do we cover some of these in LPA VPA?

Top answer:

Once LPs have invested in the fund, you will need to provide reports on your companies. Before that, you can show select companies in your data room to investors who have signed a letter of intent.

 -  Mike Suprovici
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Is it okay to warehouse a deal if it fits the thesis well?

Is it okay to warehouse a deal if it fits the thesis well?

Top answer:

You need to apply a very consistent rule to which of your previous investments are warehoused into the fund, you can't pick and choose.

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Can venture partners also be LPs?

Can venture partners also be LPs?

Top answer:

Yes, Venture Partners can also be LPs. However, if they make investment decisions for the fund, that may affect their limited partner status. 

 -  Mike Suprovici
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What are the particular issues to take into account when doing cross-border deals?

What are the particular issues to take into account when doing cross-border deals?

Top answer:

Your costs will be higher because you will need local counsel and probably local tax advice (in addition to counsel for your fund). Legal agreements may be differently drafted, require different procedures, etc. Your LPs may also face si...

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Is there a template affirmation agreement for sharing track records with prior funds?

Is there a template affirmation agreement for sharing track records with prior funds?

Top answer:

We don’t have a template affirmation agreement. Everyone does this differently, but in general most people start with a verbal agreement first.

 -  Mike Suprovici
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What is the '<https://fi.co/progress|For Progress>' designation on the VC Lab website?

What is the '' designation on the VC Lab website?

Top answer:

The link that you shared describes everything about For Progress. It provides startup and investment related metrics based on the 169 official SDG sub-goals. The full set of metrics is outlined here: https://govclab.com/2023/05/23/ventu...

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Community Member
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What do you think of the response from an LP who declined to participate in the fund?

What do you think of the response from an LP who declined to participate in the fund?

Top answer:

It’s just a no. I would not put too much weight on the reasoning for now. That being said, for your reference, VC is a good way for families to build inter-generational wealth.

 -  Mike Suprovici
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How do GPs typically fund the setup costs before closing?

How do GPs typically fund the setup costs before closing?

Top answer:

Generally speaking, fund managers will work with their attorneys to defer costs until the fund does a first close. Then, the fund manager can use some of the management fees and sometimes the fund itself to pay for expenses. With regard...

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Do LPs Typically Receive Detailed Information on Each Company Invested in a Fund for Performance Reporting?

How much information do LPs typically get about performance? Specifically do some LPs require or get detailed information about each company invested in (for instance so that they can disclose what their holdings are)? We are talking to a wealth manager for a group of HNWI and it sounds like they would need regular (annual?) updates about each company in the fund. Is that typical? If so that would probably require quite a bit of admin work on the fund side.

Top answer:

The larger the fund, the bigger the reporting requirements. Yes, it’s not uncommon for LPs to require detailed info about each company. This is typically done monthly. In addition, there are also annual reporting requirements too. In...