How does receiving a Carry share work?
Leads may opt to share a proportion of their Carry with an entity in exchange for their aid in a deal. A recipient however can receive Carry only if they have rendered their assistance or skills in identifying, evaluating, or settling the deal in any capacity. Hence the beneficiary may not necessarily be accredited.
If you have been invited to receive a Carry, you can accept this Carry by clicking on the link which the Lead sends you. Then, you can choose a Carry recipient to receive the Carry.
Note that your entity will require Identity Verification. Hence, they may require authentication via a Government ID. In some cases, they need to provide necessary additional information regarding their investing entity.
Once you accept the invitation the Lead will automatically be notified via email and they must confirm the agreement to seal the transfer. You will then receive an electronically signed copy of the Carry share agreement via Lilypads platform.
2. How does sharing carry work?
A deal partner with whom you intend to share carry must already be a part of your network. They must be someone who provides substantial assistance to you and your fund in identifying, assessing, and negotiating Fund investments. This would typically include tasks such as helping in determining a potential Portfolio vehicle’s business model, calculating the share price, negotiating the terms of the investment, monitoring the investment after it is closed, and performing similar functions for any follow-up investments by the Fund.
3. How can I discount carry?
You can choose to specify your Carry for each deal while also having the capacity to adjust your Carry for individual LPs.
If you want certain LPs to pay less Carry than the default amount of the SPV, Lilypads can implement the requested changes after the LP has completed the closing flow.
Note that the SPV’s default should be the maximum Carry any LP inside the SPV is paying. Hence you can only adjust certain LP’s Carry level down.
The process is described here as follows:
- LP executes the closing flow.
- The closing flow shows default Carry. (e.g. 20%)
- You email us to lower a particular LP to 15% Carry.
- Then we will adjust our records.
- Upon finalizing the SPV, we send you a link with all LPs and their Carries.
- You can either confirm or inform us about any final edits.
- We settle the SPV, hem-in all carries, and notify LPs.
- Finally, LPs will be able to download the final SPV docs, along with a Carry adjustment side letter for those LPs who pay less than the default.
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.