Fund Structure

How an investment firm or fund is legally and economically organised: who owns the vehicle, how the partners are arranged, how capital is raised and how carry is paid. In the saved tweets filed here it shows up in five forms.

• Crossover (public/private) structures. Dave Ambrose describes two routes into privates: letting an existing public fund invest “up to X%” of AUM in privates as defined in the LPA, or creating a dedicated fund entity with its own team, starter capital and carry. See Crossover Funds.
• Solo versus partnership. A thread on the solo-GP model observes that several first-wave solo GPs were adding partners or hiring, and that “most institutionals won’t invest in solo GPs”. See Solo Capitalist.
• Permanent capital. A 26-post thread from Longvue explains its lower-middle-market, permanent-capital partner model. See Longvue and permanent capital.
• Evergreen and crystallised carry. Ho Nam argues that rolling carry back into a fund lets the GP earn “carry on top of carry”, that sophisticated LPs dislike evergreen structures for this reason, and that few funds have anything like the Sequoia Fund restructuring’s scale of profits tied up in public stock. See Sequoia Capital.
• Incentives and decision-making. A no-fee structure left a real estate GP under financial pressure and led to sub-optimal decisions (LP Alignment); a post on investing partnerships asks how non-consensus bets get made when a consensus of partners is needed (Decision Making, Eat What You Kill).

Where this appears

Saved tweets:

• A Friend Recently Asked About… (tweet)
• Being a Solo Capitalist is… (tweet)
• What is Longvue… (tweet)
• It’s Laughable to Think That… (tweet)
• Good Post on Fund Partnerships… (tweet)
• The Product of Venture Capital… (tweet)
• Driving the Clown Car (ht… (tweet)