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Life of a fund is typically
10 years.
Can be extended twice one year at a time. With agreement you can extend it
beyond that, but no one wants to.
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Most funds will call or
deploy 80% of the capital in the first 6 years. Voyager II was started in
1998 and will be 80% invested by 6th anniversary
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Remaining 15% over last 3
years.
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Carried interest vs
management fee dilemma.
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Defer management fees. Quit
charging them after year 4.
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1998 year fund will return
1X.
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Allocated $12m per
investment before. Now $7-8 million. Firms are becoming much more capital
efficient.
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Tropos Networks. Voyager
owns 15% $55M RAISED. $8-9M BY Voyager. Approaching profitability with cash
on board.
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Distribution of proceeds
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aQuantive went public. 6
month lock up and shares crashed. Held on and sold an distributed lately.
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Typically distribute public
securities. Called an in-kind distribution. The fund can take credit for the
shares when distributed and the limited partner gets discretion over their
tax and upside.
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Acquisition by a public
company is usually for cash. Not going to issue shares for a small purchase.
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Acquisition by a private
company no liquidity. Typically end up with unregistered shares in a small
company.
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If the company is profitable
but not liquid they buy back the investment or get another investor.
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If it’s on the rocks, there
are all sorts of bottom feeders that will give you 20 cents on the dollar.
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Voyager Fund II planned
15-20 investments. Did 24. 200m
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Still takes 30m to build a
real company.
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