How do distributions work in Lilypads Venture Funds?

The LP who is subscribed to the Lilypads Venture Funds participate only in distributions from the quarterly funds to which they contributed some amount. Generally, these LPs are not concerned with Portfolio investments of funds that are formed before they were accepted into the Lilypads venture funds or after their subscription is canceled or rejected.

 

When a fund exits the investments that are made with an LP’s contribution, the LP receives the returns after any applicable carry is paid off. 

 

On the other hand, the funds that do not exit every investment before ending their life cycle, will automatically be liquidated by adhering to the terms and conditions set by the applicable fund.

How does Lilypads calculate ownership for distribution?

Lilypads calculates the ownership of individual LPs in any given quarterly fund on a pro-rata basis to their capital contributions. This also includes any rollover contributions and increases in their amount of capital investments.

If I subscribe to a Minimum Subscription Period, how will it affect my distributions?

In a quarterly fund, an LP’s interest is calculated based on the relative investments of all LP in that quarterly fund itself. In this case, an LP’s interest will not be based on their relative investment amount over that LP’s entire minimum subscription period, provided that the minimum subscription period is greater than one quarterly fund.

 

If an LP has invested the same amount in each quarterly fund that has a different minimum subscription period, each LP may result in having a shorter minimum subscription period and receive a full return on their capital at a much faster rate than an LP who has a longer minimum subscription period. Therefore the LPs who have a shorter minimum subscription period will be required to pay carried interest earlier than usual, during their subscription.

How does carried interest work in Lilypads Venture Funds?

Lilypads calculates carried interest across a limited partner’s subscription period. The subscription period of a limited partner, depends mainly on the options provided by the fund manager. Therefore, a limited partner can opt for a quarter by quarter subscription for a multi-quarter subscription period. 

 

Hence, a limited partner who subscribes on a quarter by quarter subscription period, are entitled to receive only the amount that they contributed to the quarterly fund that experience is the exit before that limited partner starts paying the carried interest.

 

Besides, if a Limited Partner subscribes on a multi-quarter subscription period, they are eligible to receive the total amount that they contributed to every quarterly fund within that subscription period before the limited partner starts paying carried interest.




This help page and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction.

Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors.