As an “angel” LP, I’ve seen VC funds let me write them checks in 2 different ways 👇
1️⃣ Directly into the fund –> Common when I’m investing in 1st time fund managers
2️⃣ Via a SPV –> Larger funds (or funds that don’t want to deal with fund admin + capital calls for smaller LPs, or who are bumping up against SEC # of LP limits) might have an entity where they corral all of their small LPs, and then that entity becomes the LP in the fund.
In both of those 👆 cases, I’m getting the same updates as the “direct” LPs are getting, minus any super sensitive stuff that would have probably only gone to larger LPs any way.
For the 👆 SPVs I just mentioned, I’ve seen 2 different ways that they collect the capital from the LPs:
1️⃣ “Typical” 2+ year capital call schedule, with a bigger chunk up front and then smaller calls over the investing life of the fund.
2️⃣ All at once, where the full amount is requested upfront.
Personally, I prefer capital calls. A 2+ year capital call schedule means the money goes out gradually. As someone who balances both fund investing and direct angel investments, I appreciate that fund investments can have a slower cash outlay.
But of course … everyone’s situation is different. This is #notfinancialadvice and you should make sure to talk to all of your financial and legal advisors before making any investing decisions!
