Wed, 17 August 2022
Accounting and Governance
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
There are specific rules for the governance of a VC Fund.
The limited partners must be accredited investors.
There can be no more than 99 investors in the fund.
There can be no “bad actors” in the fund.
Venture funds are different from companies in that they are partnerships.
For accounting, fund managers need to keep accurate records and track the ownership of each Limited Partner.
The funds are illiquid with long holding periods.
Management fees need to be calculated and drawn from the fund at the appropriate time.
The fund manager must calculate the carry and make clear what has been paid.
The manager should seek tax efficiency by matching the taxes to the income.
Finally, the manager should provide financial reports quarterly and annually.
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