Download Cornerstone v3
The Cornerstone LPA, the easy-to-use limited partner agreement for venture capital funds, has been upgraded to Version 3.
Version 3 of the Cornerstone LPA incorporates the latest SEC regulation changes and supports both American and European waterfall structures. The upgrades reflect extensive feedback, enhancing the core agreement to meet evolving industry standards. It is recommended that everyone upgrade.
Having gained widespread acclaim and adoption, the Cornerstone LPA is fast becoming the standard agreement for emerging fund managers and has been reviewed by leading fund formation attorneys and endorsed by numerous limited partners.
As regulatory and market circumstances change, the Cornerstone is continuously updated to reflect best practices for managers and limited partners alike.
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Cornerstone Improvements
The Cornerstone LPA has been updated to include options for distribution methods, compliance with the latest SEC regulations, and other changes required by managers.…
Category: Venture Capital Legal Templates
Agreements, documents and resources for the venture capital industry.
A number of investors say they are interested in your fund or startup. But how can you tell which investors are really serious about committing capital? And how can you nudge them into writing those checks?
Answer: The PACT
DOWNLOAD THE PACT
Why should you use the PACT?
Collecting signed PACTs provides a clear and time saving way to calculate the Hard Circled total, which reduces the uncertainty and guesswork of closing a multi-party investment round.
VC Lab successfully uses the PACT to help venture capital firms secure capital from Limited Partners. The Founder Institute also uses the PACT in the Funding Lab program for startups raising angel capital. To date, investors and funds have signed over 3,500 PACTs, and VC Lab systems are tracking as much as $60 MM per month in new PACTs being signed worldwide.…
A PACT (“Pledge Agreement for Capital Transaction”) is a non-binding letter of intent signed by a qualified investor to indicate their desire to invest a specific amount of money into a startup or into a venture capital fund.
The PACT is a Commitment Letter, which is commonly used in financial transactions.
The PACT Letter was developed in 2018 by the Founder Institute to solve the problem of internal fund offerings having excess investor interest. Before the creation of the PACT, it was difficult to identify which potential investors were serious about investing, commonly referred to as Hard Circled, and which other investors were casually exploring the investment, referred to as Soft Circled. Collecting signed PACT Letters provides a clear way to calculate the Hard Circled total, which reduces the uncertainty and guesswork of closing a multi-party investment round.…
The Cornerstone LPA, the easy-to-use limited partner agreement for venture capital funds, has been upgraded to Version 3.
View the changes and download here.
Cornerstone V3
Version 1 and Version 1.1 of Cornerstone have been used by hundreds of funds around the world, reviewed by dozens of fund formation attorneys and signed by hundreds of limited partners. The agreement has also been localized to multiple fund domiciles.
The widespread adoption of the Cornerstone has provided feedback and ideas to improve the core agreement template. Each week, a diverse team of formation professionals and attorneys discuss the feedback and ideas to validate their merits, ultimately drafting any viable enhancements. Version 2 captures most of these improvements.
The following contains an outline of the improvements, instructions to upgrade from previous versions, a detailed change log and the Agreement itself.…
Overview
Venture Share is a template agreement for venture capital firms to quickly engage top Venture Partners worldwide. The following is an outline of the topics covered:
Venture Partners
Venture Partners are part-time members of a venture capital team.
Model
Venture Partners are compensated with carried interest in a fund.
Activities
Venture Partners help with 5 types of activities at a fund: executive functions, fundraising, strategic, operating and portfolio assistance.
Compensation
Venture Partner compensation ranges based on the type of activity and the seniority of the individual.
Venture Partner Compensation Ranges
Negotiation
There are 4 steps to negotiate a Venture Partner engagement using Venture Share.
Agreement
Download the Venture Share Agreement to engage and compensate Venture Partners.
Thousands of new Venture Partners are needed to fill the ranks of emerging venture capital firms worldwide.…
This document is a version behind current. Please reference Cornerstone LPA v2.0
CORNERSTONE LPA V2
The Updated Cornerstone LPA further improves on key terms to give fund managers more flexibility. VC Lab has additionally consolidated essential sections while enhancing the overall readability of the document.
Key Updates:
KEY ECONOMIC TERMS
No major updates have been made to previous key definitions in this section.
Newly added definitions are:
Fund Thesis
Sector
Stage
Geography
Management Fee
As requested by fund managers, we’ve added a flexible ‘cascading management fee structure’ while improving readability
ARTICLE 2 – CAPITAL ACCOUNTS AND PARTNERS
2.2.2a – Capital Contributions
Removed post investment capital contribution limitations giving fund managers the option and flexibility to call capital post-investment period
2.3 – Default
Updated to enable GPs to take more actions regarding defaulting LPs
2.5 – Additional Limited Partners
Updated to enable GPs to bring in additional LPs after the close
Requiring said LPs to be on the same capital call schedules as other LPs and partners
ARTICLE 4 – OPERATIONS
4.1 – Investment Objectives
Improved follow-on investment language
4.3 – Authority of GP; Key Individuals; Conflicts of Interest; Advisory Committee
Tightened up conflicts of interest language
Flexibility to follow on investments with Special Purpose Vehicles (SPV)
4.92 – Management Fee
Update to payable management fees
ARTICLE 7 – SUBSCRIPTION
Added new Cornerstone subscription section
Conjoined from multiple sections to clearly define here
ARTICLE 8 – MISCELLANEOUS
Consolidated key terms:
8.2 Power of Attorney
8.3 Side Letters
8.4 AML and Combating the Financing of Terrorism
VC-Lab-Cornerstone-LPA [.PDF]Download…
The time has come for change in venture capitalAdeo Ressi
“The insane levels of complexity in the venture capital legal stack are excluding talent and wealth from entering the asset class,” says Adeo Ressi, CEO of VC Lab and the Founder Institute, who is also the Founding Member of TheFunded. “The documents are unreadable. Unless you are a high-paid lawyer, few understand what they are signing.”
VC Lab has re-written the main agreement used in fund formation, the Limited Partner Agreement (LPA). The new template, called Cornerstone, is a lightweight and easy-to-use template that can get fund managers started negotiating terms with Limited Partners, ahead of engaging high-priced fund formation attorneys. In a matter of minutes, fund managers can customize the Agreement and then immediately start negotiating terms with Limited Partners. …
Cornerstone by VC Lab is a lightweight and easy-to-use Limited Partnership Agreement (LPA) designed to simplify investing in the venture capital asset class by reducing the use of high-priced fund formation attorneys. Venture capitalists starting a new fund can customize and negotiate investment terms without engaging a law firm.
The Cornerstone Agreement is short, easy to read and easy to customize. The economic terms of the fund are clearly laid out in the beginning of the Cornerstone Agreement, and General Partners can customize certain terms to fit their fund’s needs. On a high level the process is as follows:
A General Partner takes the Cornerstone Agreement and customizes plug variables in the Key Economic Terms for a new fund offering.The General Partner shares the customized Cornerstone Agreement with potential Limited Partners for feedback on the terms.Once…
Cornerstone is a lightweight and easy-to-use Limited Partnership Agreement for next-generation venture capital funds. It was released by VC Lab in October of 2021. Cornerstone is designed to reduce mundane and expensive fund formation activities, removing barriers of entry for new managers and new limited partners to enter and grow the venture capital asset class.
A Limited Partnership Agreement (LPA) is the document that forms and governs a venture capital fund. It specifies the rules between the general partners, who make portfolio investments, and their investors, the limited partners. It serves as the operating manual for the venture business.
Traditionally, the LPA is accompanied by a Term Sheet and a Subscription Agreement, and this set of documents normally runs over a couple hundred pages in length.…