Management fees on AngelList are typically paid out on a quarterly basis. However, the exact timing and amounts can vary depending on the fund's structure and specific agreements in place. Below is an overview of how management fees are generally paid to Fund Leads.
Payout of Management Fees to Fund Leads
Management fees are usually paid to Fund Leads after they are collected from the Limited Partners (LPs). These fees are typically calculated as a percentage of the committed capital or the assets under management (AUM), and they are designed to cover the operational expenses associated with managing the fund.
While the general practice is quarterly payments, the exact timing can depend on the fund’s structure and any special arrangements. Fund Leads should be aware that the payment schedule may vary, especially for specific quarters like Q4.
Receiving Management Fees
Once the fund has closed all capital commitments, Fund Leads can typically expect regular management fee payments. However, if there are any variations in expected payouts, these discrepancies may arise due to factors like cashless contributions. For example, if a Fund Lead is receiving management fees that vary due to changes in capital or other factors, it’s advisable to communicate directly with an Account Manager for clarification.
Variations in Payment Amounts
Changes in the amount of management fees paid can occur, especially when cashless contributions are involved. This occurs when part of the management fee is covered through fund performance, instead of upfront contributions. Variability can also happen due to performance fluctuations, capital changes, or specific terms in the fund's agreement.
Understanding LP Contributions and Closures
It’s important to note that an LP completing the closing flow and contributing capital does not mean the LP has legally “closed” into the Fund/SPV. Legally closing the LP into the vehicle binds the investor to the Limited Partnership Agreement (LPA) and officially designates the investor as a Limited Partner of the vehicle.
AngelList employs a "money-first, close-second" approach. The reason for this approach is that it benefits the Fund Leads by requiring LPs to contribute capital upfront, ensuring that the capital is committed. Following the LP’s capital contribution, the LP will still need to be formally closed into the Fund/SPV, which happens at a later stage.
Custom Requests and Adjustments
There may be instances where Fund Leads request custom arrangements, such as back-queuing cashless contributions or adjusting the timing of fee payments. While AngelList supports many custom arrangements, not all requests can be accommodated automatically, and adjustments may require direct coordination with the finance team.