Capital raising is a critical time for any startup. Take control of your startup’s equity with this free cap table template.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n Most venture capital funds (and, more generally, most private equity funds) are structured with limited partnerships.<\/p>\n\n\n\n A fund will consist of general partners as well as limited partners. The general partners are responsible for running and managing the partnership. In theory, they have unlimited liability for the debts and obligations of the fund<\/a>. However, in practice, general partners typically operate through limited liability entities (such as limited companies) to protect themselves from personal liability.<\/p>\n\n\n\n Limited partners are any partners who are not general partners. They will contribute to the capital pool using their own money but will not participate in the fund\u2019s management. Typically, a limited partner will be an institutional investor, such as:<\/p>\n\n\n\n When dealing with venture capital funds, your company will typically enter into investment agreements with the fund itself (which is structured as a limited partnership). <\/p>\n\n\n\n Your company is not itself a partner in the VC fund’s limited partnership structure. Rather, you are the investee company receiving capital from the fund.<\/p>\n<\/div>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nWhat is a Partnership Structure?<\/h2>\n\n\n\n
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Venture capital can be provided by: <\/p>\n\n\n\n
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- private investors; <\/li>\n\n\n\n
- investment banks; and <\/li>\n\n\n\n
- other investing institutions.<\/li>\n<\/ul>\n\n\n\n
Venture capital is usually a good option for young businesses, especially if they have limited access to traditional debt instruments. For instance, it may be difficult for startups to access capital markets and bank loans. Furthermore, having large amounts of funding can be essential for your business to carry out its strategy.<\/p>\n\n\n\n
However, venture capitalists will also usually want an equity stake in your company. This means that the main downside of securing funding from a venture capital fund is that you can lose control over some of the decision-making within your company.<\/p>\n\n\n
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\n \n Cap Table Template<\/div>\n\n- a pension fund;<\/li>\n\n\n\n
- a sovereign wealth fund;<\/li>\n\n\n\n
- a university endowment; or<\/li>\n\n\n\n
- a high net-worth individual.<\/li>\n<\/ul>\n\n\n\n
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