- Standard practice is to keep money in the fund account and deploy quickly to invest into companies.
- Investment instruments are not covered by the FDIC nor the CDIC.
- First time fund managers for Fund I or Fund II should not have consistent material funding amounts sitting idle in their accounts. Fund III and Fund IV are more aligned with a consideration for a "Sweep Repo" as this mechanism will require material cash minimums to maintain to actually benefit.
Deploying idle investment capital from LPs into investment instruments is NOT standard, so we don't recommend doing this until Fund III or Fund IV is being managed.
@angela what about for management fees - with 2 & 20 model on a $5M fund there can be almost $1M in management fees sitting in an account after all the capital is called (we expect to take 1-3 years), what should the plan be for that money sitting there particularly looking at the impact of inflation in a 10 year time horizon. For any gains, who would the gains (or even loses) be attributed to should it not just sit in an account, even a high interest account I think would make sense minimally.
You will not have $1m sitting in an account because you will be doing capital calls.