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27 Cards in this Set
- Front
- Back
Capital Calls
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Periodic capital provisions or contributions to a VC fund; also known as drawdowns or takedowns
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Committed Capital
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The total amount of capital promised by the LPs over the lifetime of the fund
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Investment/Commitment Period
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The years where the committed capital is drawn down
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Follow-On Investments
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After the investment period is over, these are made into the portfolio investments by the VC; investments made in round "Y" by a VC investor in round "X" where Y>X.
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Multistage Fund
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A VC fund that invests across all stages
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Generalist
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A fund that invests without regard for industry focus
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Vintage Year
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Typically defined as the calendar year that a VC fund began investing; often used to compare fund performance
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Fund-of-Funds
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A fund that makes investments in other funds rather than making investments directly in portfolio companies; typically organized as a limited partnership with many of the same rules as other PE funds
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Management Fees
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Regular payments made by the limited partners to general partners intended to cover the fixed costs of operating the fund
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Lifetime Fees
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The total amount of management fees that will be paid by limited partners over the lifetime of a fund
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Investment Capital
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The difference between committed capital and lifetime fees
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Reasons why Mgmt Fees are Based on CC rather than MV
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(1) The fees would be low in the first few years and may not be able to cover expenses
(2) Mgmt fees based on portfolio value would create an incentive for VCs to invest quickly, thus decreasing investment quality (3) Market Values are hard to calculate for non-traded companies, and the fee level would thus be arbitrary |
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Realized Investments
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Those investments that have been exited or those in companies that have been shut down
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Unrealized Investments
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Those investments that have not yet been exited in companies that still exist
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Cost Basis
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The dollar amount of the original investment
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Invested Capital
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The cost basis for the investment capital of the fund that has already been deployed
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Net Invested Capital
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Invested capital less the cost basis of realized and written-off investments
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Carried Interest or Carry
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The fund profits paid to the general partner
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Carried Interest Basis
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The threshold that must be exceeded before the GPs can claim a profit
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Contributed Capital
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The portion of committed capital that has already been transferred from the LPs to the GPs; the invested capital plus any management fees paid to date
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Net Contributed Capital
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Contributed capital less the cost basis of any realized and written-off investments
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Preferred/Hurdle Returns
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A preset level of returns that the fund must pay to investors before the GPs can begin to take any carried interest
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Catch-up Provision
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When LPs receive a hurdle return, the GP may have this that allows them to receive a share greater that carried interest for some range of profits after the hurdle return is achieved
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Write Downs
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Partial losses
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Clawback
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If carried interest is received before the entire carried interest basis and hurdle returns have been paid and if later proceeds are insufficient to reach these thresholds, then GPs may be subject to this provision, where some of the earlier carried interest must be transferred to the LPs
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Restrictive Covenants
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Contractual terms in LP agreements that restrict the activities of the GP
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Categories of Restrictive Covenants
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(1) Restrictions on the management of the fund
(2) Restrictions on the activities of the GPs (3) Restrictions on the types of investments |