Entity architecture, waterfalls, fees, LP/LLC, economics.
What Drag and Tag Rights Actually Sell Drag-along and tag-along rights apply to a sale of the membership interests in the management company itself, the Sponsor LLC, sitting at the top of the structure. They govern who gets to own the business that runs the deals. They have nothing to
What It Actually Means to Run a Rolling Subscription Cycle A rolling fund is a fund that admits new investors on a schedule instead of all at once. The sponsor opens the fund, sets recurring windows (quarterly and semi-annual are the common ones), and lets new investors come in during
The Core Distinction: What Happens When Operating Cash Falls Short? If your deal doesn’t throw off enough cash to pay the full preferred equity return in a given year, the answer depends on one word in your Operating Agreement: cumulative or non-cumulative. Under a cumulative structure, the unpaid portion carries
When you return capital to your investors after a refinance or a partial sale, whether the preferred return keeps accruing on the full original investment or drops to the remaining balance comes down to one thing: how your Operating Agreement defines the capital base. If the document ties the preferred
The Difference Between a Manager, a Managing Member, and a Managing Partner Two of these are real legal roles, and one isn’t. In an LLC, “Manager” and “Managing Member” are titles that come out of the state LLC statute and actually mean something. “Managing Partner” is a business term people
The Short Answer on Setting Your Minimum Investment There is no SEC-mandated minimum investment. The SEC does not tell you that an investor has to write at least $25,000, $50,000, or $100,000. That number is yours to set. You set it by working backward from your target raise against the
What Is a Blind Pool Fund? (Replacing the Asset With a Strategy) A blind pool fund is a Regulation D offering where the sponsor raises capital based on a defined investment strategy instead of a specific, pre-identified asset. Investors commit before they know exactly what the fund will buy. That
What a Key Person Clause Actually Does in a Regulation D Fund A key person clause is a continuity mechanism built into the fund’s governing documents. It pauses new investment activity when a critical sponsor dies, becomes disabled, or stops running the fund – so the fund does not keep
“Cumulative” and “compounding” are two different machines, and sponsors mix them up constantly. Cumulative means an unpaid preferred return carries forward to the next year, dollar-for-dollar. Compounding means that same unpaid amount goes into a pool that earns its own additional return. That one distinction changes how much cash the
The Fund Compensation Stack is Not Just “2 and 20” Fund manager compensation is not one bucket of profits, and it is not a mandatory “2 and 20” rule. It is a layered legal structure that separates four different things: fees you earn for service, expenses the fund pays back
