How should I think about structuring a fund on the AngelList platform?

Two important questions to answer before launching a Venture Fund on AngelList are:

  1. What advisory structure should I use?
  2. What legal documents should I use?

Since different fund managers have different needs, there isn’t a one-size-fits-all solution. The following is an exploration of the different options provided by AngelList and a few items to consider when choosing your fund structure. 

Which advisory structure is right for me?

AngelList supports two advisory structures:

  • Self-Advised fund: The fund manager provides the entities that serve as the general partner and investment adviser to the fund.
  • AngelList-Advised fund: AngelList entities serve as legal general partner and investment adviser to the fund, alongside the fund manager who serves as “Fund Lead” and “Sub-Adviser” to the fund.

Self-Advised Fund

The fund manager, and/or its affiliated entities, will serve as the legal general partner and investment adviser to the fund. The fund manager will be solely responsible for managing the fund in accordance with the fund’s governing documents, including all customary general partner duties such as legal and regulatory compliance.

Why might a fund manager choose to launch a Self-Advised fund?

  1. They want to more easily accommodate the requests of institutional LPs who may require edits to the fund’s governing documents or side letters. If you anticipate large institutional investors in your fund, or LPs with side letters, we strongly recommend utilizing the Self-Advised structure. 
  2. They want to make unilateral decisions on all investments, LPs, and fund edge cases (e.g., the number of partners to include in a LPAC, side letter requests from interested partners, etc.)
  3. They want to raise a fund that invests primarily in non-qualifying investments, such as crypto and secondaries. 
  4. They’ve retained outside counsel to help support any unique needs of the fund (international regulatory regimes, more complex governance structures, etc.).
  5. Utilize existing fund documents that they’ve already drafted with their own counsel. 

It is incumbent on the fund manager to ensure compliance with all fund regulatory and legal requirements with outside counsel.

AngelList-Advised Fund

AngelList entities serve as the legal general partner and investment adviser to the fund and will assist with fund regulatory and legal compliance requirements in these roles. Note that all AngelList-Advised funds use a set of AngelList template legal documents, which generally cannot be customized. 

Why might a fund manager choose to launch an AngelList-Advised fund? 

  1. They don’t expect revisions to the fund’s governing documents, and are looking for highly templated documents that will allow them to launch quickly. 
  2. They don’t expect to bring on major institutional LPs to the fund who may require side letter agreements or heavy customizations to the fund’s operations. 
  3. They’re hoping to lean on AngelList’s existing compliance and regulatory requirements to help provide them with existing oversight measures.  

Should I use AngelList documents or create my own? 

The next decision involves choosing your fund’s legal documentation (i.e., the Limited Partnership Agreement, Private Placement Memorandum, and Subscription Agreement). Depending on the advisory structure you choose, you may have the option to select between AngelList template documents or documents drafted by your own legal counsel.

AngelList template documents

AngelList provides a suite of industry vetted fund documents for SPVs, Venture Funds, and Rolling Funds. Using AngelList documents allows fund managers to:

  • Leverage AngelList's industry vetted template fund documents
  • Save time and money on fund formation costs 
  • Customize a set of market standard provisions for venture capital fund LPAs

AngelList offers template documents for either Self-Advised or AngelList-Advised funds, however, please note that the AngelList-Advised structure is less receptive to edits or comments. If you anticipate comments or edits to the template documents (edits either proposed by you or by a potential investor), the Self-Advised structure may be a better solution. 

As a Self-Advised fund using AngelList template documents, it’s incumbent on the fund manager to comply with the correct regulatory exemptions.

Externally drafted documents

Fund managers can also bring externally drafted fund documents to the AngelList platform. Using externally drafted documents allows fund managers to:

  • Work closely with outside legal counsel to draft the documents
  • Utilize document templates from previous funds

Please note that the AngelList-Advised structure cannot support externally drafted documents. If you wish to draft your legal documents separately, you must opt to Self-Advise your fund.

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This article is solely for informational purposes only and does not constitute legal, tax, investment, or advice of any kind. For advice specific to your situation, please consult with an expert. 

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