All Questions

No. The Cornerstone LPA has not yet been localized for the Netherlands. You will need hire local counsel to draft the various agreements necessary.

No. The Cornerstone LPA has not yet been localized for the Netherlands. You will need hire local counsel to draft the various agreements necessary.

Side letters are still common and allowed by the SEC rules. Ethical managers typically disclose these side-letters because the terms can often affect the performance of the fund.

Side letters are still common and allowed by the SEC rules. Ethical managers typically disclose these side-letters because the terms can often affect the performance of the fund.

The criteria for determining when a portfolio company qualifies for a follow-on investment typically depend on the fund's size, strategy, and the growth trajectory of the company. Factors include the potential for future rounds, market c...

The criteria for determining when a portfolio company qualifies for a follow-on investment typically depend on the fund's size, strategy, and the growth trajectory of the company. Factors include the potential for future rounds, market conditions, and the need to support companies through critical milestones. Approval from the Limited Partner Advisory Committee (LPAC) may be required, especially if there's a conflict of interest, such as when the company was an angel investment of the general partner.

Every transaction that is recorded in the system needs to have supporting documentation, such as a legal agreement. Firms may also use an external auditor to further verify the date. However most small funds in Delaware often don't do an...

Every transaction that is recorded in the system needs to have supporting documentation, such as a legal agreement. Firms may also use an external auditor to further verify the date. However most small funds in Delaware often don't do an audit because: 1. The reports generated by the Decile Partners back office team are audit ready via numerous checks and balances 2. audits create a drag on metrics and 3. audits can create a significant opportunity costs for funds under $25m.

Below are the options for managing a defaulting LP: Option 1: The cleanest and best option is for you have the defaulting LPs sell their position other buyers. To ‘replace’ LPs - new LPs need to buy the entire position from the defaulti...

Below are the options for managing a defaulting LP: Option 1: The cleanest and best option is for you have the defaulting LPs sell their position other buyers. To ‘replace’ LPs - new LPs need to buy the entire position from the defaulting LPs. Here is how it works: 1. You introduce them (defaulting LP 1) to a buyer (LP 2), or they find a potential buyer 2. LP 1 & LP2 agree on a price (i.e. I’ll give you $15k for the $25k capital call that you made and I’ll take over the capital calls) 3. They notify you for approval 4. You notify us and we’ll handle the transfer. Important: new LPs must buy the entire position of the default LP. So, if the defaulting LP signed an LPA for $100k, the new LP needs to buy the entire $100k position (not more, not less) Option 2: Adjust capital account balance. This would effectively reduce the fund size without lowering the total Management Fees. Under this scenario, you re-adjust their contribution as if they committed less capital and there fore you get less fees. So, if $100k commitment wired $50k so far and can’t make any more capital calls - they are now a $50k LP and the fund gets $10k in management fees (20% of the new comittment) vs $20k if the LP continues making their capital calls to reach $100k. Option 3 (last resort): Invoke Default Provision in the LPA. For example, the Cornerstone LPA states: (b) if the Limited Partner has made a Capital Contribution, General Partner may sell the defaulting Limited Partner’s Interest for a purchase price equal to 50% of the lesser of (i) the defaulting Limited Partner’s aggregate Capital Contributions, or (ii) the Fair Value of the defaulting Limited Partner’s Interest at the time of default

There is not, generally speaking, a singular set of best practices to evaluate how easily a Limited Partnership Agreement (or indeed any other legal agreement), can be updated to meet the requirements of a newly promulgated policy.  Fac...

There is not, generally speaking, a singular set of best practices to evaluate how easily a Limited Partnership Agreement (or indeed any other legal agreement), can be updated to meet the requirements of a newly promulgated policy.  Factors to take into consideration will depend on: • Jurisdiction of the fund and its entities; • Structure of the fund and its entities; • Statutes governing said entities; • How an LPA is drafted, and whether it allows for flexibility or classically spells out every single contingency; • Factoring in the above, what mechanisms (if any) are baked into an LPA to make substantive (not administrative) changes; • The spirit and text of the newly promulgated regulatory framework (i.e. are there strict requirements that are spelled out?); • Sophistication level of fund managers and limited partners; • And more. Typically a full renegotiation of an LPA is not required though, as the general practice with legal agreements is to apply all of the above only to provisions that may be affected, where possible.  TL:DR - it will be a qualitative evaluation every time, and if there is any best practice, it is to consult experienced regulatory experts - this is not the space in which to attempt DIY or to get "creative". 

There are two approaches to drafting legal agreements. One way is for the law firms to make these documents extremely prescriptive resulting in 100s of pages of legal language. A second and more streamlined approach is to cover basic con...

There are two approaches to drafting legal agreements. One way is for the law firms to make these documents extremely prescriptive resulting in 100s of pages of legal language. A second and more streamlined approach is to cover basic concepts while making everything else implied. Good examples of this second approach are the SAFE and the Cornerstone LPA. It's just not necessary to go into this level of detail for funds that are less then $50m because any type of lawsuits would be fatal to the fund and the LPs as a result. Bigger funds will have a Private Placement Memorandum to specify all the things that can go wrong, and since there is so much more capital on the line, the additional fund expenses are worth it. Now, to answer you question more directly - since the fund manager is a fiduciary and is also indemnified from damages except for Malfeasance, this type of clause is not necessary.  

There is no concept of GP commit in the Start Fund product. So, there is no expected amount. 

There is no concept of GP commit in the Start Fund product. So, there is no expected amount. 

Yes, no problem. You can sign the agreement when you're ready to launch your Start Fund.

Yes, no problem. You can sign the agreement when you're ready to launch your Start Fund.