nDesigned to be “self liquidating” – i.e., dissolve after 10 years
n (known
as the “harvest period”)
nInvestments typically made in the first 3-4 years (2-3x reserves are
¨typically
set aside for follow-on investment rounds over the harvest period)
nLimited Partners (LPs) invest in the fund (provide leveraged
capital)
¨Investor class
includes institutional investors (e.g., state pension funds),
¨ fund of funds, high-networth
individuals, etc.
¨LPs have first
priority over distributions from fund
¨ (80% carried interest plus
accumulated dividends is standard practice)
nGeneral Partners (GPs) invest in companies on behalf of the LPs
¨Not uncommon for
each GP to manage $25m+ in capital and sit on several
¨ B.O.D.s at a given point in
time
¨GPs operate on a
management fee (typically 2.5 – 3% of total
fund)
¨GPs typically earn a
20% carried interest on distributions