All Questions

Yes, a capital call of 20% is common. Most funds call 20% or 25% of committed capital upon the first close. This is a typical practice in venture capital to manage fund liquidity and investment needs.

Yes, a capital call of 20% is common. Most funds call 20% or 25% of committed capital upon the first close. This is a typical practice in venture capital to manage fund liquidity and investment needs.

This really depends on the general profile of a particular fund's limited partners - most of the time Limited Partnership Agreements provide 15 days from receiving a capital call for the Limited Partner to wire in the requested amount. I...

This really depends on the general profile of a particular fund's limited partners - most of the time Limited Partnership Agreements provide 15 days from receiving a capital call for the Limited Partner to wire in the requested amount. If the timing starts to slip, it may indicate a liquidity issue with a particular limited partner, and the fund manager may need to have a conversation to figure out what is going on. 

Generally speaking, Series B and later Preferred Stock Financings do not fit into an investment thesis for "early-stage" or "seed-stage" startups - however it's important to keep in mind that there is not necessarily a singular definitio...

Generally speaking, Series B and later Preferred Stock Financings do not fit into an investment thesis for "early-stage" or "seed-stage" startups - however it's important to keep in mind that there is not necessarily a singular definition of "early-stage" agreed upon throughout the world. 

While I cannot speak for the product roadmap, all wiring of capital called by the fund must go through Anti Money Laundering and other compliance checks to ensure that the bank account matches the legal signatory on the Limited Partnersh...

While I cannot speak for the product roadmap, all wiring of capital called by the fund must go through Anti Money Laundering and other compliance checks to ensure that the bank account matches the legal signatory on the Limited Partnership Agreement, and that the underlying persons are not on any sanction lists or otherwise potentially problematic . That is to say, it's not quite as simple as "click a button", though we're striving to make it as seamless as possible given these types of requirements. 

Venture capital funds generally only involve themselves to ensure that after a priced round in which they are participating (or leading for that matter), there is a large enough option pool (aka stock plan, aka equity incentive plan, and...

Venture capital funds generally only involve themselves to ensure that after a priced round in which they are participating (or leading for that matter), there is a large enough option pool (aka stock plan, aka equity incentive plan, and many more) to grant equity to and incentivize hires on the roadmap, with a buffer as needed (as well as for any bonus grants for performance, etc.).  Otherwise, in the normal course of business for the startup, venture capital funds do not have any say in any changes to the option pool, unless they have negotiated for and included specific requirements into the priced round's legal agreements. With respect to startups, they generally try to reserve sufficient stock in the option pool to last for a while, as reserving additional stock for issuance from the option pool requires paperwork and corresponding securities filings, in many instances. 

The Post-Money Valuation Cap SAFE from YC Template (this is the standard SAFE document template) the valuation cap is explicit. Other versions of the SAFE are discount, where valuation is the priced round minus the agreed discount, or MF...

The Post-Money Valuation Cap SAFE from YC Template (this is the standard SAFE document template) the valuation cap is explicit. Other versions of the SAFE are discount, where valuation is the priced round minus the agreed discount, or MFN (Most Favored Nations) where the SAFE holder gets the best terms of all SAFEs in that funding round.

At least 25% with target 25-40% of the company, with the lower end being more common for high-valuation rounds or when there’s significant dilution from earlier funding (e.g., seed rounds). This exemplifies the need for capital journey p...

At least 25% with target 25-40% of the company, with the lower end being more common for high-valuation rounds or when there’s significant dilution from earlier funding (e.g., seed rounds). This exemplifies the need for capital journey planning and detailed pro forma cap table review, the Taylor Davidson model can help, and you may be able to advise here for mutually good outcomes.  An area that deserves special attention on cap tables is equity allocated to incubators/accelerators, confirming this is reflective of the value added to the company and - if disproportionate work with the founders and attempt to renegotiate - prior to a priced round. 

Here are some instructions to build a world-class pitch deck for a venture capital fund. To start, if you have a bad Thesis, you will have a bad presentation. Start by refining your Thesis until 1 in 5 people that you pitch your Thesis t...

Here are some instructions to build a world-class pitch deck for a venture capital fund. To start, if you have a bad Thesis, you will have a bad presentation. Start by refining your Thesis until 1 in 5 people that you pitch your Thesis to express interest in investing. When you are ready to build your deck, keep your slide design clean with a simple and mostly white background. Use 1 or 2 word titles for each slide following the slide structure. Ensure that the content of every slide matches and supports your Thesis. Below is a list of the different slides needed. We recommend that you follow the guidelines exactly to build the early versions of the deck, then refine the presentation with feedback from pitching LPs. NECESSARY SLIDES: • Title: Displays the name of the fund, date of last update, and contact information of key individuals. • Thesis: Provides the one sentence investment Thesis. • Team: Introduces Managing Partners with a picture and three short bullets on each. • Team (Continued): Introduces Partners and Venture Partners with a picture and three short bullets on each. • Value Add: Describes the unique value that the fund offers to portfolio companies to generate LP returns. • Market: Demonstrates the market attractiveness through a simple chart, table, or statistic. • Track Record: Showcases 1-3 relevant deals with logos, few word descriptions, value added, and markup achieved. • Pipeline: Highlights 1-3 potential deals by sharing a general overview of the company without sharing specifics. • Allocation: Tabulates the number of deals by stage along with estimated investment, valuation, and ownership details. • Returns: Exhibits anticipated returns from hypothetical portfolio companies categorized by exit sizes. • Liquidity: Illustrates up to three projected fund outcome scenarios using multiple or IRR, possibly through a pie chart. • Economics: Provides a table outlining fund economic terms like Minimum Investment Amount, Management Fees, and Carried Interest. • Thank You: Provides the fund's tagline, target closing date, and contact information for the General Partners. • Disclaimer: Contains legal disclaimers to mitigate liability. OPTIONAL SLIDES: • Deal Warehouse: Highlights 1-5 completed deals that will be transferred into the fund with company logos, brief descriptions, relevance to thesis, and investment terms. • Strategy: Describes how you will access the market for the best returns. • Operations: Explains any unique operational processes or systems. • Competition: Identifies relevant firms focused on the same markets with differentiation points. • Partners: A list of partners, possible as a logo pile, to improve the credibility of the fund. • Advantages: A list of items that help the fund to stand out. • Appendix: Houses updated old slides or additional research and data pertinent to the market segment.

Conversions of convertible instruments and how fully diluted shares are counted are separate concepts.  SAFEs and Convertible Notes generally are almost never converted into common shares during a priced round. If this is being contemp...

Conversions of convertible instruments and how fully diluted shares are counted are separate concepts.  SAFEs and Convertible Notes generally are almost never converted into common shares during a priced round. If this is being contemplated, then it is very likely that the priced round (aka preferred stock financing, at least in the US) is a "down round" or a "recap" - whereby the portfolio company is raising money at less than desirable terms just to survive.  As for the "how", these conversions are baked into the priced round's financing agreements, and involve complex calculations that are typically done by lead counsel on a spreadsheet generally referred as the "pro forma". You can find examples of the agreements here (https://nvca.org/model-legal-documents/), but please note that the conversions and documents are custom for each deal, depending on the negotiated terms, investors involved, state of the cap table, etc. Counting fully diluted shares is simply a way of understanding a company's cap table - it's typically used in calculating the "pro forma" mentioned above. Yes - most of the time preferred shares count on a 1:1 basis when discussing the company's cap table on a fully diluted basis, but this is also something that can vary depending on the company's legal agreements.  A typical conversion ratio does not apply to either of the above.