What types of warehoused deals should you have?
What types of warehoused deals should you have?
Deals that are recent with high potential for markup in the near future and that are on point to your thesis.
I have been working with rockstar founders who are in seed stage in FinTech, CleanTech, and PropTech. What is the appropriate way to bring them into my fund? I have primarily focused my attention on deck review, DD, and introductions to my network for potential interest to join their seed round. Appreciate any feedback on this. What deal warehousing should not be considered into my fund?
There are two types of Deal Warehouse companies for a fund: a Pipeline deal and a portfolio Investment.
For the Pipeline deals, the manager creates a strong relationship with the CEO of a target company and works to align the closing date of the fund with the closing date of the round. It often takes longer to close the fund, so the manager asks the CEO to hold a position in the round after the round closes, which is ideal as it is closer in time to the next markup. These deals are shared with LPs by describing the business without sharing the company name.
For portfolio Investments, a manager personally makes an investment into the company and then transfers the investment at cost into the fund after closing. Ideally, the investment will be marked up before the transfer, and the manager gives the benefit of the markup to the incoming LPs. These investments are shared with LPs by providing the full details to get LPs excited by the opportunity to invest in the fund.