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1,174
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How can a fund protect its ROI without follow-on capital?

A small startup studio fund can get crammed down if and when future rounds are needed.  Some innovative methods to protect the fund's interest without sabotaging future funding would be useful to have.

Top answer:

By definition, a studio will have a lot more ownership then most investors. Because of the complicated cap-tables of studio companies, many, if not most VCs avoid investing in such companies. Rather then attempting to figure out how to m...

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How is ownership in a VC fund passed on to survivors of a deceased LP.

For an individual who is an LP, how does ownership in a given VC fund get passed to the individual's survivors.

Top answer:

If an LP (Limited Partner) passes away, the LP's partnership interest is handled according to the arrangements made with respect to the LP's heirs, executors/administrators of the estate, successors, etc. The LP is responsible for settin...

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How is interest collected on called capital treated by GPs?

Do GPs assess a management fee on interest collected on deposits and is it recognized by the carried interest provision as another source of fees ?

Top answer:

Interest collected on called capital is typically not subject to management fees and is not recognized by the carried interest provision as another source of fees. The interest earned on called capital is usually credited back to the Lim...

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Do Asian investors prefer to invest in US-, Hong Kong-, or Singapore-domiciled funds?

Our fund's investor demographic will include US and Southeast Asians.  What regulatory regime would be most favorable given the diversity of our investors?

Top answer:

Asian investors often prefer to invest in US-domiciled funds due to the favorable regulatory environment and established legal framework. Delaware is a popular choice for fund domicile due to its well-developed corporate laws and investo...

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Auto generating first draft of the legal documents

Would there be a functionality within the Decile Hub to auto generate the first draft of some of the key legal documents, such compliance policy or valuation policy, related to the venture capital deals?

Top answer:

Decile Hub currently supports a variety of template agreements for members of Decile Partners, including the Cornerstone LPA, Venture Share for venture partners, and others. Members of Decile Partners have built-in digital signing in a p...

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Can sanctions for non-compliance with capital Call be calculated, showcased and addressed to relevant LP's by Decile Hub?

Top answer:

Decile Hub has the capability to calculate and showcase how much capital is called and which investors have fulfilled their capital call. For non-compliance, fund managers can send reminders and contact directly with their investors to r...

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Should I show or promise a lower IRR and then over deliver bigger returns or promise higher IRR to attract LPs and investors. I got a mixed reaction from the different LPs

Top answer:

Don't promise anything specific. This is a high-risk asset class. Instead, keep it high level and say something like: "It’s not uncommon for venture funds to target a 3-4x return in a medium scenario and 8x+ in a high scenario." This app...

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How do we ensure that our contract protects a) the jurisdictions b) the Mensarius oath c) as well as ensure the fund cant be overridden or taken over by LPs for their own interests

Top answer:

To ensure your contract protects the jurisdictions, the Mensarius Oath, and prevents LPs from overriding or taking over the fund for their own interests, follow these steps: 1. **Jurisdictions**: Work with experienced legal counsel to e...

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Aside from the Management Company, General Partner, and Limited Partner, what other legal entities need to be created for a Venture Studio? What incorporation structure is recommended for those entities?

Here the ideal structure for a Venture Studio is laid out, showing 5 legal entities - (1) Management Company, (2) General Partner, (3) Limited Partner, (4) The Venture Studio / Accelerator (operations), and (5) An Individual Company (created by the Venture Studio / Accelerator). While researching, its been suggested that the Venture Studio operations (4) be created as an LLC with the individual companies (5) being incorporated as C-corps, though I'd like some validation or refutation of this.

Top answer:

This article outlines the Venture Studio stricture and entities: https://govclab.com/2023/04/25/how-to-build-a-venture-studio/ The set-up of the Venture Studio as a C-corp or an LLC depends on your strategy. If you are planning to take ...

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How does DecileHub handle currency fluctuations for international investments?

For a fund with international investments, does DecileHub track differences in currency? Or is the best practice to simply keep all investments denominated in one currency?

Top answer:

Typically funds invest in one currency and it's usually USD. This is because many companies with the ambition to become venture scale, usually move their HQ to a major domicile such as Delaware. VCs tend to standardize their currency for...

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Can you do general solicitation in Australia?

Guessing if you can would need a .au domain  I know crowdfunding is out as that is licensed, not that I would wan to do that.

Top answer:

It's unlikely that a domain would be the deciding factor whether or not something is classified as General Solicitation (or its equivalent) in Australia. We recommend reaching out to local fund experts for guidance. 

 -  Haw Kuo
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How are Capital Calls for the GP’s Commit made on Decile Hub?

Obviously since the GP is making the Capital Call, it knows that he also needs to deposit his share of the funds, but I assume that that should be registered formally somewhere in the system and I couldn't find where. The GP does not appear in the Capital Commitment table when you use the option to make a capital call, so wondering if it gets roped in automatically.

Top answer:

Your Fund Admin will take care of this. Right now, the back-office function is for Decile Partners. On a high level, depending on the legal structure, the GP will have its own capital account in hub and the accounting team reflects this. 

 -  Mike Suprovici
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