A VC fund is a legal partnership with GPs, LPs, a 10-year life, and a defined investment period.
Founders spend years working with VCs without fully understanding the vehicle behind the check. The structure is not accounting trivia — it explains almost every 'why did they do that' moment.
A VC fund is a limited partnership. The GP (general partner) is the fund manager. LPs (limited partners) provide the capital and take limited liability. A management company sits alongside, employing the investment team.
Most funds are 10 years, with two optional 1-year extensions. Years 1-4: active investment period, new checks written. Years 5-7: follow-on-only, portfolio management. Years 8-10: harvest, distribute exits back to LPs.
The fund's vintage is the year it was raised. Vintage matters — a 2021 fund invested at peak valuations and is now managing markdowns. A 2024 fund is deploying at lower entry prices. LP appetite for the next fund is a direct function of vintage returns.
Fund size dictates check size math. A $500M fund typically wants a 15-25% initial ownership and $10-15M initial check. A $50M seed fund writes $1-3M checks. This is why fit-with-fund-size matters more than fit-with-partner enthusiasm.
Separate legal entity that employs partners and staff. Funded from the 2% management fee. Owns things funds cannot easily own — office lease, brand, platform team. Some firms distribute management-company ownership; most don't.
Most firms run several funds simultaneously: a current main fund, an opportunity fund for later-stage follow-ons, sometimes a seed fund. Ask which fund is investing in you — it determines board rights, reserve capacity, and follow-on behavior.
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