FAQ
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What is an accredited investor and why do I need to be one?
Venture investing is a high risk investment avenue and for that reason, the government sets out financial criteria to protect investors. In summary, participants must satisfy ONE or more of the SEC's criteria. A non-exhaustive list includes:
an individual with a net worth or joint net worth with a spouse or spousal equivalent of at least $1 million, not including the value of his or her primary residence;
an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;
an entity of a type not otherwise qualifying as accredited that own investments in excess of $5 million;
a knowledgeable employee, as defined in rule 3c-5(a)(4) under the Investment Company Act, of the issuer of securities where that issuer is a 3(c)(1) or 3(c)(7) private fund; or
a family office and its family clients if the family office has assets under management in excess of $5 million and whose prospective investments are directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment
More information can be found at the SEC website including: SEC FAQs and SEC Education, amongst other sources both within and external to the SEC.
Note that the aforementioned information is supplied as a starting point for potential LPs to independently investigate and verify their personal circumstances. LPs should not rely solely on this information in their decision-making process.
What is the timing for the fund to kick off and start investing?
May 1, 2024: Member onboarding commences.
Oct 31, 2024: Member onboarding closes. Executed LP agreements and associated paperwork must be received.
Nov 14, 2024: Deadline for funds to be received.
Nov 26, 2024: Kick off!
Dec 7, 2024: Committee / team volunteer survey closes.
Dec 15, 2024: Committees / teams assigned.
Feb 4, 2025: First Deal Flow Meeting.
Feb 11, 2025: First regular Investment Meeting.
Regular meetings will be held at a 6-weekly cadence during the life of the fund.
How much is the capital contribution?
Each LP (and MPs) will contribute USD $15,000. The capital contribution is a fixed amount for all members. An admin fee will be required in addition to the capital contribution.
We are undertaking every reasonable effort to provide members (including MPs) will certainty of their financial commitment in WeCAN. There are no plans to request more funds from members during the estimated 7 to 10 year life of the fund. Except under highly extenuating circumstances and with agreement from members, there will be no capital calls during the fund's term.
If there’s no carry or management fee, what does the USD $1,500 ‘admin’ fee cover?
The admin fee covers our costs to 'administer', i.e. establish and maintain, the fund. For example, SEC filings, annual business and tax filings, and similar paperwork need to be done. As MPs, we are volunteering our time to manage some of the more administrative processes, however we do need engage professionals to ensure all regulatory, tax and other legal activities are undertaken properly.
While we are making estimates based on best efforts, many unforeseen changes can occur over the life of the fund. If our estimates are lower than required to administer the fund, we will need to leverage additional amounts from the capital pool (or request additional contributions from members, which is the less preferred option). Any surplus will be returned equally to all members at fund closing.
Our admin fee contribution does not cover the costs of distributing funds from one or more exits. If this occurs, we will use the return from the exit to cover the any surplus administrative costs, and the remainder will be distributed equally to all fund members.
What is the time commitment for participating in the fund?
Please refer to the LP Briefing for more information. In summary, we will have two types of LPs: 'Active' and 'Passive' LPs.
Passive LPs will comprise a minority of LPs. They will still have an equal vote and equal profit share, but we won't count on their participation to expend the fund.
The majority of our LPs (targeting 40 LPs) will be committed Active LPs. It is important for all of us that Active LPs adhere to their commitment so we are able to share the workload at a manageable level. A summary of time commitment is as follows, noting that this is broken down per team and investment stage - this is not a monthly commitment. The LP Briefing material provides more information.
What benefit do I get by participating in WeCAN?
We are seeking to generate a return on our investment while learning and expanding our networks. Pooling our money into a fund allows us to diversify our investments, which spreads our risk and increases our chances of a return on investment (ROI). While numbers vary according to sources, it is estimated that out of every ten (10) deals, only one or two may result in positive ROIs. Furthermore, breaking even and returning a profit might take several years. Despite this, profits can be meaningful and we will be actively seeking companies we believe will return a profit. While effort is volunteer-based, this fund is not a not-for-profit or charity.
In addition to the tangible financial ROI we are seeking, the ability to undertake hands-on learning in a group environment provides an invaluable practical learning experience with a much lower cost than a textbook-based curriculum (e.g. an MBA). Depending on the amount an LP volunteers, there is opportunity to dig in and critically understand each phase of the investment process, enabling LPs to move forward with independent, future ventures with deeper skills, higher confidence, and a fantastic network.
Why is WeCAN only investing in C-corps? Will this restrict our investment opportunities?
This is for tax purposes and is a common approach in the Angel community; it will not unduly limit our investment opportunities as most US-based start-ups are, or intend to be, C-corps.