All Questions

Funds normally compensate people that make introductions to portfolio companies by making them a Venture Partner using the Venture Share agreement here: https://govclab.com/2022/03/10/venture-share/. The formal discussion to be a Venture...

Funds normally compensate people that make introductions to portfolio companies by making them a Venture Partner using the Venture Share agreement here: https://govclab.com/2022/03/10/venture-share/. The formal discussion to be a Venture Partner is done after the individual starts adding value to the fund, not before. 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 struck as a carry share, where the percentage is calculated against the total carried interest for the fund. For example, if a venture partner has 10% deal by deal carry on a fund that has a 20% total carried interest, then the venture partner would receive 2% of the proceeds from the deal. Deal by deal carry is not recommended for three major reasons. First, it is technically difficult to administer because of how different carry waterfalls work within a fund. As an example, a single deal may have positive returns while the total fund may not be in carry, so then a venture partner expecting a return may get nothing. Second, in the United States, the most popular fund domicile, the underlying structure of granting deal by deal carry violates the 409a tax code for deferred compensation and places the whole general partner entity at risk for a very high tax and penalty rate (>50%). Third, the underlying premise of granting deal by deal carry is that the associated person, often a venture partner, will add value around the deal in question, and often this expectation does not match reality. As a result, Decile Group and VC Lab do not support deal by deal carry. Instead, the fund is encouraged to make anyone that they might offer deal by deal carry into a regular venture partner with a smaller carry share.

Usually the reason that language is there to allow for capital call lines. You would probably need to specify this or work with your IC if you have one to get this done. That being said, you can also just do recycling to achieve the sam...

Usually the reason that language is there to allow for capital call lines. You would probably need to specify this or work with your IC if you have one to get this done. That being said, you can also just do recycling to achieve the same effect, with less risk. One final thing on this, I’m not sure that a bank would loan you the money for something like this. Banks are super conservative and the amount of paperwork that you would need to make this happen is probably prohibitive.

Yes it’s common that during the active investment period (up to year 3/4) management fees are higher, say 3% and in year 9 and 10 it’s .5%

Yes it’s common that during the active investment period (up to year 3/4) management fees are higher, say 3% and in year 9 and 10 it’s .5%

You should use a VP agreement. There is no set #. It depends how you use your VPs. If you are using a network of VPs for deal flow and support, then you may have quite a few. If you’re using the VPs for specialized advice for example, yo...

You should use a VP agreement. There is no set #. It depends how you use your VPs. If you are using a network of VPs for deal flow and support, then you may have quite a few. If you’re using the VPs for specialized advice for example, you may only need 2-3

Yes, you can call that markup

Yes, you can call that markup

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.  ...

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.  Say you want to do a capital call for ~25%. So, if you close on $2m, you will pull down ~$500k. Then, you will do a second close, and do another ~25% on the next close etc.. until you close the whole fund. Then, you can change the capital call schedule - please go here to learn more about capital calls: https://govclab.com/2023/05/07/vc-capital-calls/

You can highlight this startup if you don’t have anything better.

You can highlight this startup if you don’t have anything better.

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+.

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+.

Make it $100k for individuals. You can make exceptions for some of it they push back hard.

Make it $100k for individuals. You can make exceptions for some of it they push back hard.

This is generally too complicated and not worth pursuing practically.

This is generally too complicated and not worth pursuing practically.

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

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

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...

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 struck as a carry share, where the percentage is calculated against the total carried interest for the fund. For example, if a venture partner has 10% deal by deal carry on a fund that has a 20% total carried interest, then the venture partner would receive 2% of the proceeds from the deal. The returns from deal by deal carry depend on the waterfall defined in the limited partner agreement, which are either the American or European waterfall. However, deal by deal carry is not recommended for three major reasons. First, it is technically difficult to administer because of how different carry waterfalls work within a fund. As an example, a single deal may have positive returns while the total fund may not be in carry, so then a venture partner expecting a return may get nothing. Second, in the United States, the most popular fund domicile, the underlying structure of granting deal by deal carry violates the 409a tax code for deferred compensation and places the whole general partner entity at risk for a very high tax and penalty rate (>50%). Third, the underlying premise of granting deal by deal carry is that the associated person, often a venture partner, will add value around the deal in question, and often this expectation does not match reality. As a result, Decile Group and VC Lab do not support deal by deal carry. Instead, the fund is encouraged to make anyone that they might offer deal by deal carry into a regular venture partner with a smaller carry share.

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...

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 necessary commitments. If you are interested in participating, please sign this commitment letter: IMPORTANT: if they don’t sign the PACT, don’t waste more time with them.

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.

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.

You must highlight only track record that is on thesis. 

You must highlight only track record that is on thesis. 

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

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

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.

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.

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

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

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. 

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.