Fund Formation
Formation and closing counsel for venture and private equity funds — emerging managers and established sponsors alike.
Emerging managers and established sponsors
Most of our fund-formation work is for first- and second-time managers — GPs spinning out of existing platforms or operators who’ve decided to institutionalize. We also do ongoing counsel for established sponsors on successor funds, sidecars, and special-purpose vehicles.
A first fund is as much a business-formation project as a legal one. We scope the fund terms around the strategy — check size, number of positions, reserve ratio, fund life, management fee, carry — and build the documents from there.
Core documents
The standard fund stack we handle:
- Limited Partnership Agreement (LPA) — economic waterfall, governance, key-person provisions, investment restrictions, reporting obligations
- Private Placement Memorandum (PPM) — required disclosures and risk factors for Rule 506 offerings
- Subscription Agreement and Investor Questionnaire — accredited-investor and qualified-purchaser certifications
- Side Letters — most-favored-nation (MFN) clauses, fee and carry rebates, excuse and opt-out rights, reporting enhancements
- GP Management Agreement and GP LLC Agreement — carry split, vesting, governance among the GP principals
- Separately-Managed Accounts and sidecars for individual LPs that want additional exposure
Regulatory structure
Most venture and PE funds rely on exemptions under Section 3(c)(1) (100-investor limit) or 3(c)(7) (qualified purchasers only) of the Investment Company Act, and Rule 506(b) or 506(c) of Regulation D for the offering itself. We structure the fund within those frameworks and coordinate with your chosen fund administrator and auditor from the outset.
Advisers Act registration versus exemption (the exempt reporting adviser (ERA) regime and the venture capital fund adviser and private fund adviser exemptions) gets decided at formation and affects reporting, compliance, and examination obligations downstream. We map those requirements for you at launch.
Representative matter
First close of a $30M debut emerging-manager venture fund — LPA, PPM, subscription documents, side letters, GP agreements, and regulatory filings. First close achieved within the planned window.
Frequently asked.
What’s the difference between a 506(b) and 506(c) offering?
Both are exemptions under Rule 506 of Regulation D that allow private funds to raise capital without registering the securities. In a 506(b) offering, the GP can’t generally solicit or advertise the fund, and can accept up to 35 non-accredited (sophisticated) investors — in practice, most venture and PE funds limit to accredited only. In a 506(c), the GP can publicly advertise, but all investors must be verified accredited (a heightened standard beyond self-certification). Most debut funds default to 506(b) to keep closing mechanics simple.
When does a fund need to register under the Investment Advisers Act?
Most venture and PE fund advisers qualify for an exemption from federal SEC registration — the venture capital fund adviser exemption or the private fund adviser exemption, depending on fund strategy and AUM. Exempt reporting advisers (ERAs) still file a truncated Form ADV and are subject to certain Advisers Act provisions. State-level requirements (including California’s) also apply to advisers operating locally. The right regime is decided at formation and we walk through it in the initial engagement.
What are ‘side letters’ and when do LPs request them?
Side letters are bilateral agreements between the fund and a specific LP that grant that LP rights or accommodations beyond the LPA — most-favored-nation (MFN) treatment, fee or carry rebates for anchor investors, excuse or opt-out rights for certain investments, enhanced reporting, or specific tax accommodations (ERISA, VCOC, non-US investors). Anchor LPs, institutional LPs, and larger tickets are the most frequent side-letter requesters. Managing the collective effect of side letters — particularly MFN cascades — is part of the work.
How long does first close take?
From engagement to first close typically runs three to six months for an emerging-manager fund, depending on the state of LP conversations, whether the GP structure is already built, and regulatory filings. Most of the timeline is LP-side diligence and subscription processing, not drafting. We build in a closing calendar early so you can pace fundraising against the legal workstream.
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Tell us a bit about what you’re working on. We’ll come back within one business day with a clear sense of fit, scope, and budget.
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