Great post! In contrast to the LP-friendly standard you described, some funds use a GP-friendly “negative consent” structure, where the investment period automatically continues unless the LPAC and/or the LPs vote to terminate it within a set timeframe (e.g., 30-180 days). This can create pressure on LPs and LPAC members and allow GPs to “divide and conquer” key stakeholders to block a termination vote, particularly when supermajority thresholds (e.g., 66 2/3%, or 75%) are required. It underscores the importance of LPs carefully reviewing and, where possible, negotiating fund terms to protect their interests. There are certainly a lot of dynamics at work in private funds — thanks for writing about them, SK!
In the near future, could you please cover the fund legal structures we see across the US and the EU? For instance, what are the considerations that go behind setting up a fund as a SICAV, Partnership, or a BDC? I might be asking a lot of you, but I trust you will do an amazing job explaining it 😊
In-interest where i represents percentage of total capital allocated is like bitcoin mining where it’s not number of miners but percentage of hash rate that matters (for mining pools) or in expectation for the amount of bitcoin each miner mines on average.
Well written! Do you remember the Novalpina - Stephen Peel drama? I think we’d enjoy reading that too if you had time to break down such cases.
Thank you - yes back in 2020/21. I'll try to weave in real-life stories in the future. Appreciate the suggestion!
Great post! In contrast to the LP-friendly standard you described, some funds use a GP-friendly “negative consent” structure, where the investment period automatically continues unless the LPAC and/or the LPs vote to terminate it within a set timeframe (e.g., 30-180 days). This can create pressure on LPs and LPAC members and allow GPs to “divide and conquer” key stakeholders to block a termination vote, particularly when supermajority thresholds (e.g., 66 2/3%, or 75%) are required. It underscores the importance of LPs carefully reviewing and, where possible, negotiating fund terms to protect their interests. There are certainly a lot of dynamics at work in private funds — thanks for writing about them, SK!
Very well explained. Thank you for making these concepts easy to understand!
Of course. Thank you for taking the time to give the article a read. If you have any suggestions for topics to cover, let me know!
In the near future, could you please cover the fund legal structures we see across the US and the EU? For instance, what are the considerations that go behind setting up a fund as a SICAV, Partnership, or a BDC? I might be asking a lot of you, but I trust you will do an amazing job explaining it 😊
Not an issue at all - will think about how to present the content. Thank you!
In-interest where i represents percentage of total capital allocated is like bitcoin mining where it’s not number of miners but percentage of hash rate that matters (for mining pools) or in expectation for the amount of bitcoin each miner mines on average.
Nice explainer post, thanks!
Thanks James - a great analogy. Appreciate your thoughts as always!