Formation counsel for venture sponsors. We form the limited partnership and the management company and negotiate the carry and the side letters, so a first fund can launch clean and a successor can raise on terms that hold.
The venture capital fund adviser exemption is a list of conditions. No more than 20 percent of a fund's committed capital may sit in non-qualifying investments, secondaries and public stock included. Borrowing is capped at 15 percent of commitments, and at 120 days. Investors get no redemption rights beyond the extraordinary. A manager whose every fund keeps to the list files as an exempt reporting adviser instead of registering; one fund off the list and the exemption goes with it.
Venture has its own conventions. Reserves are held back for the follow-on rounds, and recycling puts early proceeds back to work within limits the LPA sets. The carry vests among the partners over several years, and a qualifying venture capital fund may now admit 250 investors under Section 3(c)(1) rather than 100, provided it raises no more than $12 million.
We act for sponsors and for the institutions and families that commit to them. The documents are the limited partnership agreement, the GP and management-company agreements that split fee and carry among the team, and the offering package. One partner is accountable from term sheet to close.
We form the limited partnership and its general partner and draft the limited partnership agreement that governs the fund, covering capital commitments, the investment period, the distribution waterfall, and the constitutional terms a venture fund runs on.
The management company that employs the team and collects the fee, and the GP that holds the carry, each with the equity splits, vesting, and admission terms that let partners be added and departures handled.
The carry split, the hurdle and any catch-up, the GP commitment, and the vesting and forfeiture schedule that rewards staying with the fund, drafted with the tax consequences of the carry worked into the structure.
The private placement memorandum, subscription documents, and the securities-law exemption analysis that lets the fund raise within the rules, together with the venture capital fund adviser exemption analysis for the manager.
The terms institutional and anchor investors ask for individually, such as fee discounts, co-investment rights, advisory-committee seats, and MFN and reporting accommodations, negotiated for sponsors and investors with the cumulative effect tracked.
The deployment mechanics that decide how much capital reaches companies are settled in the LPA at formation: reserve policy for follow-ons, recycling limits, capital-call and default provisions, and the investment-period and extension terms.
An adviser relying on the venture capital exemption files Form ADV Part 1 within 60 days of relying on it, updates it within 90 days of each fiscal year end, and remains subject to the anti-fraud rule for advisers to pooled vehicles and to pay-to-play limits. State registration may still apply where the manager sits.
A qualifying portfolio company is private at the time of investment, does not borrow or issue debt in connection with the fund's investment, and is not itself a fund. Shares bought from a founder or an earlier investor rather than from the company do not qualify, so secondary purchases consume the 20 percent basket.
Gain on qualified small business stock can be excluded from an investor's tax, in full after a five-year hold and, for stock issued after July 4, 2025, in part after three. The exclusion passes through a partnership only to partners who held their interest when the fund bought the shares, a point later closers notice.
A profits interest in the general partner is generally not taxed when granted, but it is usually paired with a protective Section 83(b) election, which must reach the IRS within 30 days of the grant and cannot be made late. The GP agreement should fix the grant date so the deadline is visible.
Each anchor investor's side letter is negotiated on its own, but together they can quietly rewrite how the fund operates. The fee, co-invest, and MFN terms have to be tracked as a cumulative stack as well as letter by letter.
Most LPAs bar the sponsor from raising a successor fund with a substantially similar strategy until the current fund is largely invested, reserved, or committed, often around three-quarters of commitments. The next raise is therefore timed by the current deployment schedule, and warehoused deals and cross-fund investments usually need advisory-committee consent.
The sponsor's deck becomes a structure: the limited partnership and its GP formed, the management company stood up, and the carry split, hurdle, and vesting settled among the partners before any LP sees a page.
The venture capital fund adviser exemption is run against the strategy, with the qualifying-investment limits tested and the exempt-reporting-adviser filing scoped, and the PPM and subscription documents are drafted to raise inside the securities-law exemptions.
Anchor commitments land and the negotiation turns individual: fee breaks, co-invest rights, advisory-committee seats, and MFN protection traded letter by letter, with the cumulative stack tracked so the LPA still means what it says.
Later closes true up with interest, the fundraising period ends, and the fund shifts to the mechanics the LPA fixed at formation: capital calls, reserves for follow-ons, and recycling within its limits. The successor raise is already implied in the documents.
A venture fund is negotiated once and lived in for a decade. Draft it for year ten.
A venture capital fund is a closed-end pooled vehicle, usually a limited partnership, that raises committed capital from limited partners and invests it in early- and growth-stage companies over a fixed term. The fund sits alongside a general partner that holds the carried interest and a management company that runs the team and collects the management fee. Vehicle selection, the LPA, and the GP and management-company documents are settled at formation, before the first commitment closes.
Often it does not. A manager that advises only qualifying venture capital funds may rely on the venture capital fund adviser exemption and file as an exempt reporting adviser rather than registering in full. Qualification turns on the fund's investment limits and the assets it holds, and the exemption does not switch off the anti-fraud rules, marketing limits, or reporting obligations. We run the exemption analysis at formation and build the compliance program around the result.
Carried interest is the GP's share of the fund's profits, typically expressed as a percentage above a return threshold and divided among the partners under a vesting schedule that rewards staying with the fund. The fee, the carry split, the hurdle and any catch-up, key-person provisions, and the vesting and forfeiture terms are negotiated in the LPA and the GP agreement. We draft and negotiate these economics for sponsors and for investors, with the tax consequences built into the draft.
Side letters are individually negotiated agreements that give particular limited partners terms the LPA does not: fee discounts, co-investment rights, advisory-committee seats, transfer and excuse rights, most-favored-nation protection, and regulatory or reporting accommodations for institutional investors. We negotiate side letters for sponsors and for investors and track the cumulative effect, because a stack of them can rewrite how the fund operates in practice.
Recycling lets a fund reinvest a portion of returned capital or proceeds rather than distributing all of it, so more of the committed capital reaches portfolio companies. Reserves are the capital a manager holds back from initial checks to support follow-on rounds in winners. Both are governed by the LPA. The recycling limits, the reserve policy, and the investment period together determine how much capital is actually deployed, which is why they are settled at formation.
Yes. A first-time sponsor needs the full architecture built: entity formation, the LPA and offering documents, the exemption analysis, and the management-company and GP structure. An established manager raising a successor fund needs the prior documents updated, the economics renegotiated, and the prior LPs carried forward. The engagement is sized to the raise, and one partner stays accountable through the close.
Closed-end buyout and growth funds, from vehicle selection and the LPA to the distribution waterfall and the GP/LP economics that govern a control-oriented strategy.
Explore →Closed- and open-ended real-estate vehicles, with REIT and blocker structuring, the property-level economics, and the investor terms a real-estate strategy raises on.
Explore →Open-ended and continuously offered vehicles, their subscription and redemption mechanics, gates and lock-ups, and the NAV and liquidity terms an evergreen structure depends on.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
One partner is accountable for the whole matter, and you have that partner's direct line. Chicago, London, and Dubai work to the same standard.