A cashless contribution is a mechanism by which a GP waives all or part of their management fees in exchange for a profits interest in the fund. Instead of contributing cash, the waived fees are treated as deemed contributions, effectively funding the GP’s investment in the fund without an out-of-pocket cash payment.
If the fund does not return LPs’ capital contributions, the GP will receive neither the waived fees nor a return from the fund (i.e., GP gets neither fees nor carry if the fund returns less than 1X).
Cashless contributions are set up during the fund launch process. Reach out to your AngelList point of contact if you’d like to set up cashless contributions for your fund.
A GP cannot satisfy their minimum GP commitment set forth in the LPA through waived management fees without LP consent if the Fund has already closed in LPs. A GP can increase cashless contributions beyond the minimum even after the fund has closed.
Making cashless contributions via waived management fees may have tax implications, and we strongly recommend consulting these with your tax advisor.