One provision many would structure more carefully in a first fund is **recycling**.
- In practice, emerging managers often underestimate how hard it is to track and explain recycled capital LP-by-LP.
- If drafted too broadly, it can create operational complexity, confusion in capital calls, and LP discomfort.
- A better approach is usually:
- keep recycling **narrow and explicit**
- cap it clearly
- limit it to specific uses like follow-ons, expenses, or short-term bridge needs
- consider **0% recycling** if the fund is very small and operational simplicity matters more
General rule: preserve flexibility only where it matches how the fund will actually operate.
Reference:
- https://decilegroup.com/articles/lpa-template-for-vc-funds
- In practice, emerging managers often underestimate how hard it is to track and explain recycled capital LP-by-LP.
- If drafted too broadly, it can create operational complexity, confusion in capital calls, and LP discomfort.
- A better approach is usually:
- keep recycling **narrow and explicit**
- cap it clearly
- limit it to specific uses like follow-ons, expenses, or short-term bridge needs
- consider **0% recycling** if the fund is very small and operational simplicity matters more
General rule: preserve flexibility only where it matches how the fund will actually operate.
Reference:
- https://decilegroup.com/articles/lpa-template-for-vc-funds