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hey emerging fund managers & aspiring VC general partners (esp underrepresented people) 
tonight, I have special thread for you on how to form a VC firm - inspired by @ChrisHarveyEsq (who also gave me suggestions on my pinned term sheet thread)...[a thread]
tonight, I have special thread for you on how to form a VC firm - inspired by @ChrisHarveyEsq (who also gave me suggestions on my pinned term sheet thread)...[a thread]
first, legally, anybody can be a venture capitalist.
there are minor exceptions (e.g., underage, certain felons, bad actors) but you don’t need to be licensed or even ~accredited~ investors to issue interests out of your own fund.
there are minor exceptions (e.g., underage, certain felons, bad actors) but you don’t need to be licensed or even ~accredited~ investors to issue interests out of your own fund.
and yet, only 13% of vc firms have a womxn partner. only 3.22% of vc firms have a Latinx womxn partner. only .67% of vc firms have a Black womxn partner.
if almost anyone can be a VC, why are these demographics SO skewed?
if almost anyone can be a VC, why are these demographics SO skewed?
as @km explains, venture capital is a capacity constrained industry.
all vc $$ is sourced from a select group of limited partners(family offices, pension funds, university endowments, and hnw individuals) that allocate a small % of their overall wealth to VCs.
all vc $$ is sourced from a select group of limited partners(family offices, pension funds, university endowments, and hnw individuals) that allocate a small % of their overall wealth to VCs.
so, as an aspiring fund manager - what does setting up a VC firm cost, actually?
according to Chris, avg cost to form a vc fund is $222,000. there's two options: hire a law firm if you're planning on accepting institutional funds(50-250K) or use a third party(5-10K+1.5-5% of $)
according to Chris, avg cost to form a vc fund is $222,000. there's two options: hire a law firm if you're planning on accepting institutional funds(50-250K) or use a third party(5-10K+1.5-5% of $)
these third party providers have recently allowed a lot of people who don't want huge upfront legal bills to start vc investing faster.
some examples include @AngelList syndicates & rolling venture funds(like @shl's), http://Assure.co , and @cartainc's SPV formation.
some examples include @AngelList syndicates & rolling venture funds(like @shl's), http://Assure.co , and @cartainc's SPV formation.
to get started, you'll file administrative paperwork like Form ADV for Exempt Reporting Advisers, and certain disclosure docs: Form Ds & Blue Sky filings.
vcs have often been formed as limited partnerships, but now are increasingly being structured as series LLC/LPs.
vcs have often been formed as limited partnerships, but now are increasingly being structured as series LLC/LPs.
most common legal requirements of a fund concern the regulatory issues of its investors.
for ex: all LPs must be considered accredited investors(nw 1m+ or a 200k income).
additionally, vc funds over $10m are limited to 100 investors, while funds under $10m are limited to 250.
for ex: all LPs must be considered accredited investors(nw 1m+ or a 200k income).
additionally, vc funds over $10m are limited to 100 investors, while funds under $10m are limited to 250.
for more info, check out @ChrisHarveyEsq's wonderful article "Three Ways to Launch a Venture Capital Fund" or DM him directly. I'm rooting for y'all!!
https://lawofvc.com/2020/07/28/three-ways-to-form-a-venture-capital-fund/
https://lawofvc.com/2020/07/28/three-ways-to-form-a-venture-capital-fund/
