Standard practice is to handle this through a written **conflict and allocation policy** in the LPA and operations manual.
Typical approach:
- Allocate based on each fund’s **mandate, stage, reserve policy, and concentration limits**
- If both funds are eligible, use a **pre-defined allocation method** documented in advance
- **Disclose the conflict early** to LPs
- **Document** why the split is fair and in each fund’s best interest
- Get any required approval under fund docs, which may mean **LPAC** or a **Majority in Interest of LPs**
Key point:
- Don’t decide ad hoc after the company breaks out; that is the main compliance risk.
References:
- https://decilehub.com/base/1-general_questions/163984-how-are-conflicts-between-the-fund-gp-affiliates-and-portfolio-companies-handled
- https://decilegroup.com/articles/venture-capital-complaince
Typical approach:
- Allocate based on each fund’s **mandate, stage, reserve policy, and concentration limits**
- If both funds are eligible, use a **pre-defined allocation method** documented in advance
- **Disclose the conflict early** to LPs
- **Document** why the split is fair and in each fund’s best interest
- Get any required approval under fund docs, which may mean **LPAC** or a **Majority in Interest of LPs**
Key point:
- Don’t decide ad hoc after the company breaks out; that is the main compliance risk.
References:
- https://decilehub.com/base/1-general_questions/163984-how-are-conflicts-between-the-fund-gp-affiliates-and-portfolio-companies-handled
- https://decilegroup.com/articles/venture-capital-complaince