But you need a creative lawyer because venture funds do have issues with investing in LLCs. Not to give away all of our secrets but here is the general approach to make investing in an LLC work for a venture fund. The venture fund would invest into the LLC through what is referred to as a “blocker” corporation (an entity taxed as a C corporation). The venture fund would fund the “blocker” corporation with its investment and the blocker corporation would make the investment in the LLC. Therefore, any gain or loss is allocated to the blocker corporation and not to the limited partners of the venture fund. The blocker corporation would also be responsible for any state tax filings arising from an investment in the LLC (which can be numerous depending on the LLC’s taxable presence in different states). … [Read more...] about Venture Funds: Don’t Fear the LLC
The new venture fund
The Badger Jobs Fund, on the other hand, would be a longer term program. This fund would operate as a “fund of funds,” meaning it would invest up to $200 million in qualified venture capital funds. The money would come from the placement of bonds, which would be supported by investment returns, the growth of aggregate state tax collections from the companies financed by such venture capital funds, and contingent tax credits. Each qualified venture capital fund would be limited to no more than 15% of the entire pool of funds. Additionally, for each $1 a VC fund received from the Fund, it would need to raise at least $3 on its own. … [Read more...] about $400 Million in New Venture Capital Money
Record Number of Mergers and Acquisitions. For the first half of 2015, Rock Health reported 92 merger and acquisition deals in the digital health sector, compared to 95 deals reported for the entire year of 2014. However, the total disclosed values for the 92 deals was only $2.6 billion—just 13% of last year’s disclosed total. The $475 million acquisition of MyFitness Pal by Under Armour—reported during the first quarter—remains the most notable deal in 2015. … [Read more...] about Digital Health Venture Funding, M&A and IPO Activity in the First Half of 2015
The compensation structure for VC funds vs. corporate venture funds is diametrically different. VC fund partners earn relatively low compensation, all of it coming out of the management fee that they charge to their funds. Most of their compensation comes from the 20 percent “carry” that they expect to receive from the VC fund’s profits from investments. In contrast, corporate funds pay their managers on the same basis as other executives, salary plus bonus, with greater weight on the former. Consequently, corporate funds attract a fundamentally different type of manager than VC funds – managers who may be more risk-averse or more political, than VC fund managers. This difference impacts the investment philosophies of the two types of funds. … [Read more...] about Corporate Venture Funds: Friend or Foe?
Axelrad wouldn’t tell the legal publication whether the remaining members of his group—four associates and another of counsel—would also leap to the new firm. But he did say the associates “have certainly expressed interest.” … [Read more...] about Venture Fund Lawyers Leave Wilson Sonsini