Frequently Asked Questions (FAQ)
What is StartUpNV(SNV)?
StartUpNV (SNV) is a NV statewide Incubator that helps Founders/Startups to Create, Collaborate on and Capitalize their businesses by providing mentoring and support services.
Why is SNV creating an Early-Stage Venture Fund (FundNV Venture)?
The fund is being created to allow qualifying “Members” (Startups) of SNV a more readily available source of capital to get these businesses to the next step in their growth cycle.
What are the investor terms of FundNV?
FundNV is targeting a first close of $250,000 or more on or before December 31, 2018, with one or more additional closings on or before December 31, 2019. Member units are priced at $5000 each, with a minimum investment of $10,000 per limited partner. The fund will be managed through the AngelList(“AL”) platform and requires Limited Partners to be Accredited Members of AL.
Who will manage FundNV?
An Investment Committee (IC) selected annually by SNV will act as Fund Lead and make all investment decisions.
Who can invest in the fund?
Accredited Investors as defined by the US Securities and Exchange Commission.
What is the Fund’s Investment Thesis?
FundNV will invest in StartUpNV Member companies in good standing with at least 1 to 2 quarters of performance that meet and/or exceed established goals, with positive sponsor and mentor feedback on coachability, continued scalability and their recommendation to apply for funding. FundNV will generally expect an MVP or beta to be well under way or successfully completed for a member to be considered for an investment.
How will FundNV source deal flow?
FundNV expects that the extensive statewide network of SNV will provide sufficient deal flow.
How big will the fund be?
FundNV will be $500,000 to $1,000,000 with a targeted first close of $250,000 on or before December 31, 2018.
What is the maximum initial investment by FundNV that will be allowed per SNV member company?
The maximum total investment from FundNV will be $50,000 per company.
How much can I invest?
Member units are priced at $5000 each, with a minimum investment of $10,000 per Limited Partner.
How much risk is involved?
This segment of Asset Class, early stage startup companies, is considered to be very risky and it is possible for you to lose your entire investment given the very high risk. Prospective investors should give careful consideration to actual and potential risk factors and conflicts of interest discussed in the PPM in evaluating the merits and suitability of an investment in the fund. An investment in the fund, and the portfolio companies securities, involves considerable potential risks including the possible loss all or a material portion of your investment. You should closely review the written FundNV “Risk Factors” noted in the PPM when considering an investment in FundNV.
Why should I invest in FundNV?
First and foremost, we believe our investment thesis, low cost, and risk mitigation will produce an competitive return over time. Additionally, FundNV provides an opportunity to help develop a sustainable startup ecosystem throughout the state of Nevada that historically has been neglected by the venture industry. It is also an opportunity to attract scalable startup business and founders with big ideas to the state and build a more resilient state economy.
Where can I find information about this type of investment?
Typical sites that contain information about risks, returns, etc., are the Kauffman Foundation, Angel Capital Association and the National Venture Capital Association. You can find out detailed information about FundNV in FundNV’s Private Placement Memorandum (PPM) on Angel List.
What type of startups will the fund invest in?
FundNV will only invest in StartUpNV member companies working closely with their sponsors and mentors to define and accomplish specific, measurable, relevant and time-limited growth objectives focused on revenue growth through the sale of a product or service. StartUpNV member companies become eligible to pitch to FundNV after a minimum of 1 quarter (90 days) of meeting or exceeding program goals. FundNV expects most investments will be made in companies meeting or exceeding objectives for 2-3 quarters (180 – 270 days).
Once I invest, may I withdraw my funds before the fund is terminated?
No. You should only consider investing if you are comfortable with potentially losing all of your investment — or not seeing any return for at least 7 years — and possibly closer to 12 years. Our clear objective is to earn a substantial return, however investments in early stage companies are risky. While we seek to mitigate that risk by investing in many companies that are known to StartUpNV to have shown a track record of meeting and achieving goals for some time, the investment risks remain very high.
Can I invest with IRA assets?
Yes, so long as your IRA documentation and Institution allow such an investment.
What type of legal entity is the fund?
It is a Delaware limited partnership
What kind of reporting will I get?
The fund is using the AngelList platform for all back office reporting requirements. You will be able to access information via that site including quarterly updates on fund investments.
Can I invest additional money as a Limited Partner with the fund?
Yes, to the extent the Member company seeking funding via the Fund requires additional capital and that Member company allows additional investment for the funds LP’s via a “sidecar” mechanism.
As a Limited Partner, am I allowed to negotiate terms of the Limited Partnership agreement for the Fund?
No, the terms of the LP agreement are set by AngelList and cannot be modified.
What are the Fund’s fees?
There are no management fees and a Carried Interest of 2.5% to 5% payable to AngelList for use of its platform. The fund will incur a one time $12,500 set up fee from Angel List, which will be taken from fund proceeds upon formation of the fund.
What kind of returns can I expect?
As stated, risk in these types of investments are very high and as such returns could be a total loss or in the historical range for early stage ventures of 3x to 5x. Past historical returns for this category of investing are no guarantee of future returns and you should invest only with this understanding.
What if I’m unable to meet a future capital call?
At the very least, your equity stake in the fund would be diluted. The partnership agreement addresses in detail the terms and conditions of capital calls and investors should be familiar with these terms prior to making an investment in FundNV.
What is the relationship between FundNV and StartUpNV
StartUpNV is the organizer of FundNV, but they are separate legal entities. StartUpNV is a IRS approved 501(c)3 non-profit. FundNV is a for profit venture fund formed as a Delaware Limited Partnership.