What is a Rolling Fund?
A Rolling Fund is an investment vehicle that allows fund managers to raise capital on a continuous basis through quarterly subscriptions from limited partners (LPs). Unlike traditional venture funds, which have a fixed fundraise and investment period (typically between 2-4 years), Rolling Funds enable managers to accept new investments each quarter indefinitely, providing flexibility and ongoing capital inflow.
The legal structure of a Rolling Fund consists of a series of consecutively offered, pooled investment vehicles. Each quarter, a new fund is formed under a master Delaware limited partnership. This structure streamlines capital deployment and management, allowing fund managers to focus on sourcing and investing in promising startups without the constraints of traditional fundraising cycles.
LPs benefit from a flexible, quarterly investment schedule rather than a one-time commitment. This structure allows investors to adjust their capital contributions over time based on their financial situations and investment goals.
If a quarterly fund does not deploy all investable capital within the quarterly deployment period, the remaining capital is rolled over to the subsequent quarterly fund. The cyclical administrative does not apply to rolled-over capital.
LPs have exposure to investments made during each quarter they are subscribed, as well as to investments made during quarters where capital has been rolled over.
Who is the best fit for a Rolling Fund?
Rolling Funds are best for fund managers who have consistent deal flow (3+ deals per quarter) and access to capital (minimum $500k in commitments per quarter).
How do administrative fees on rolling funds compare to administrative fees on venture funds?
Administrative fees on Rolling Funds were designed to be on par with AngelList's Full Service Core Venture Fund offering, based on an assumed 2-year deployment period — the standard deployment timeline venture funds.
The administrative fee for Rolling Funds is 2% + $25k per quarterly fund. As an illustrative example, for a Rolling Fund that raises an average of $900k per quarter:
- Each quarterly fund would pay $43k in admin fees over its 10-year lifetime
- If quarterly fund sizes remain constant, the Rolling Fund would incur $344k in total administrative fees over 8 quarters
- This equates to 4.7% of total fund size
Full Service Core Venture Funds have an annualized administrative fee of 0.2% + $20k over the fund's 10-year lifetime. A Rolling Fund raising $900k per quarter over 8 quarters is roughly equivalent to a $7.2M traditional Venture Fund.
- A $7.2M Venture Fund would pay $345.8k in administrative fees over 10 years
- This equates to 4.8% of the total fund size
While Full Service Core Venture Funds may incur additional fees for add-on services (e.g., parallel funds, blockers, or certain complex investments), Rolling Funds do not.
For a detailed comparison of both offerings, review available services for each product here.
What are the key dates to be aware of?
New quarterly funds typically launch on the first day of each calendar quarter (January 1st, April 1st, July 1st, and October 1st). However, the first quarterly fund in a Rolling Fund program can be launched at any time within the first two months of the quarter.
Key dates for initially subscribing limited partners
To participate in the current quarterly fund, an LP must subscribe by the last day of the second month of that quarter.
- LPs subscribing in the last month of the quarter will be enrolled in the next quarterly fund.
Key dates for continuing limited partners
- Funding notices for the next quarterly fund are sent two weeks before the quarter begins. These notices include key dates, such as ACH transfer initiations (if applicable).
- Reminder emails are sent periodically after the initial notice.
- To ensure exposure to a quarterly fund—and maintain “carry crossing” under a multi-quarter subscription—LPs must fund their subscription by the end of the quarter.
Example: To participate in a Q1 quarterly fund, an LP must fund their subscription by March 31st.
Key dates for making investments
- Any investment opportunity submitted on the AngelList platform (along with the intended investment amount) is allocated to the quarterly fund active at the time of submission.
- If the investment does not close before the quarter ends, it remains in that quarter’s fund until finalized—it does not roll over to the next quarter.
Example: An investment opportunity submitted on May 15th belongs to the Q2 quarterly fund. If it has not closed by the start of Q3, it remains allocated to Q2 until finalized.
How is carry calculated for LPs in Rolling Funds?
For Rolling Funds, LP Carry is calculated across the entire subscription period. This means LPs will not be charged carry until they are repaid the entire subscription period worth of commitments. Longer subscription periods result in a more uniform return profile.
What happens to uninvested capital at the end of the quarter?
If a fund does not deploy all of its capital within a given quarter, the remaining balance will typically roll over into the next quarter’s fund as additional capital contributions from participating LPs. Rolled-over capital is not subject to additional management or platform fees.
By default, an LP’s uninvested capital will be rolled into the next quarterly fund unless one of the following applies:
- The LP has canceled their subscription and the fund has more than 90 LPs, or
- The LP has canceled their subscription and their roll-over contribution is less than 10% of their total subscription amount.
Example Scenario
- An LP subscribes for $25K per quarter for four quarters (totaling $100K). The LP cancels their subscription in Q5. Of the $100K committed, only $50K was deployed (including fees and expenses).
- If the fund has more than 90 LPs: The LP’s uninvested $50K will be returned at the start of Q5 to help maintain investor limits.
- If the fund has fewer than 90 LPs: The uninvested $50K will roll into the Q5 fund, increasing investable capital.
The fund manager may override this default policy for any LP upon request.
What are the investor limits for Rolling Funds?
Over any four-quarter period, a Rolling Fund can accept up to 97 accredited investors. If you approach this limit, you have the option to transition to a parallel fund structure, which allows for up to 99 accredited investors and up to 1,999 qualified purchasers.
Rolling Funds, like the vast majority of private funds (including private equity funds and many other venture capital funds), are organized to be exempt from registration as an “investment company” under the Investment Act of 1940. Exemption from registration allows the fund to avoid the robust disclosure and reporting requirements for a registered fund. As a result, it is often easier, quicker, and more cost-effective to run the fund.
Rolling Funds—like most private funds, including private equity and many venture capital funds—are structured to be exempt from registration as an “investment company” under the Investment Company Act of 1940. This exemption eliminates the need for extensive disclosure and reporting requirements that apply to registered funds, making it easier, faster, and more cost-effective to operate.
To maintain this exemption, the SEC imposes specific requirements, including limits on the number of investors. The maximum number of investors a fund can accept depends on the type of investors it allows:
- Funds that accept only accredited investors are subject to one set of limits.
- Funds that include qualified purchasers can have a significantly higher investor cap.
Can LPs change their subscription amounts?
For Rolling Funds without a minimum quarterly commitment, LPs can increase, decrease, or cancel their subscription at any time, subject to program requirements. If no changes are made, the subscription will automatically renew at the end of the commitment period under the same terms.
Some Rolling Funds require LPs to commit for a minimum number of quarters. In these cases:
- LPs cannot cancel or decrease their subscription before completing the minimum commitment.
- LPs can increase their subscription at any time.