VC Fund Core Documents

In raising a fund, you’ll need to set up the legal documents that define how and when the limited partners provide the funds, what the fund manager will do with those funds, and how they will return the funds back to the limited partners. 

Here are some key details to include in a fund document:

1. Show who will manage the fund and what duties they have.
2. Discuss the fees and expenses for the fund managers.
3. Define profits and losses and how they are calculated.
4. Consider tax implications for the investors and maximize for tax efficiency.
5. Describe circumstances in which the limited partners must make a decision, such as adding new investors or extending the fund.
6. Show compliance with the laws around tax, transfers, and liability of the members.
7. Include indemnifications by the fund for the general partners in the case of damages. 
8. List the redemption rights, if any, by limited partners. 
9. Finally, discuss the distribution of profits, losses, assets, and the dissolution of the fund

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.