Venture Capital Fund Formation Checklist Template

Investment Thesis & Fund Strategy

The investment thesis is the product the LP is buying. It must be specific, differentiated, and credible — backed by a track record or a demonstrable edge that explains why this GP, this sector, at this stage, is better positioned than existing funds.

• Define the investment thesis — specific sector or subsector, stage focus (pre-seed, seed, Series A), geographic focus, check size range, and portfolio construction (number of companies, reserve ratio)
• Define the differentiation — what does this fund offer that the 500+ existing VC funds does not? Sourcing edge, sector expertise, network access, or operator experience?
• Define the target fund size — a realistic target based on the LP network, track record, and deployment strategy; first funds are typically $10M–$50M for emerging GPs
• Define the economics — management fee (typically 2%), carried interest (typically 20%), preferred return (hurdle rate), and any GP commitment (typically 1–3%)
• Identify the GP team — founding partners, complementary skills, track record (deal history and outcomes); GP economics allocation agreed in writing before fund formation begins
• Build the LP target list — family offices, endowments, HNWIs, fund of funds, institutional LPs, and strategic LPs; mapped to relationship strength

Legal Entity Formation

Delaware remains the preferred jurisdiction for US VC fund formation — its legal infrastructure for investment vehicles is mature, well-tested, and familiar to institutional LPs. Engage jurisdiction-specific counsel for UK and European fund structures.

• Form the fund entity — typically a Delaware Limited Partnership (the fund); GP counsel engaged before this step
• Form the General Partner entity — typically a Delaware LLC; this is the GP that manages the fund and carries the management fee and carried interest
• Form the Management Company entity — separate from the GP in many structures; employs the team and receives the management fee
• Confirm the state of formation and any additional state qualifications — required in states where the fund will be doing business or where GPs reside
• Obtain EIN numbers — for each entity formed; required for banking and regulatory filings

Core Legal Document Drafting

• Draft the Limited Partnership Agreement (LPA) — the governing document of the fund; covers LP rights, GP obligations, investment restrictions, fee structure, distribution waterfall, fund term, and GP removal provisions; negotiate key terms carefully
• Draft the Private Placement Memorandum (PPM) — disclosure document provided to prospective LPs; covers the investment strategy, team, terms, risks, and legal information; required for securities law compliance
• Draft subscription documents — the documents LPs sign to commit capital; accredited investor certification, KYC/AML information, and LP representations
• Draft side letter framework — template for LP-specific terms (most-favoured-nation provisions, reporting requirements, excuse rights); manage carefully to avoid contradicting the LPA
• Draft management agreement and GP agreement — documenting the GP entity’s relationship to the fund and management company
• Confirm all documents are reviewed by qualified fund formation counsel — do not use templates without specialist legal review

Regulatory Registration & Compliance Framework

• Determine the regulatory registration tier — Sub-$150M AUM: Exempt Reporting Adviser (ERA) filing on Form ADV Part 1A; Over $150M: full SEC registration as a Registered Investment Adviser (RIA)
• File Form ADV — through IARD system; Part 1A (required) and Part 2A brochure (required for RIAs and recommended for ERAs); with qualified compliance counsel
• Confirm Investment Company Act exemption — Rule 3(c)(1) (no more than 100 beneficial owners; not a public offering) or Rule 3(c)(7) (qualified purchasers only; unlimited investors); confirm with counsel
• Implement the AML compliance programme — REQUIRED as of January 2026: written AML policies and procedures; designated compliance officer; ongoing employee training; KYC protocols for all LPs
• Register with applicable state regulators — state notice filings where required; confirm with counsel for each state where LPs are located
• Establish compliance calendar — Form ADV annual amendment (within 90 days of fiscal year end); any ongoing regulatory filing requirements

Service Provider Appointment

• Appoint fund formation counsel — specialising in investment fund formation; the most important service provider appointment
• Appoint the fund administrator — manages LP capital accounts, capital calls, distributions, NAV calculations, and LP reporting; institutional LPs typically require independent fund administration
• Appoint an independent auditor — registered with PCAOB where required; annual audit of the fund financial statements
• Appoint a tax adviser — fund and GP tax structuring, K-1 preparation, UBTI analysis for tax-exempt LPs
• Confirm banking arrangements — fund and management company bank accounts; some banks are experienced with VC fund structures; confirm AML/KYC requirements for account opening
• Consider technology infrastructure — LP portal for reporting, CRM for deal pipeline, cap table management, and compliance management tools

LP Fundraising & First Close

• Confirm legal framework is in place — before beginning LP solicitation; formation entity, initial legal documents, and regulatory filing must exist first
• Prepare the pitch materials — pitch deck, data room, and supporting materials; consistent with the PPM; reviewed by legal counsel for compliance
• Engage anchor LPs first — the first LP commitment creates social proof; anchor LP terms may include fee discounts or advisory board seats
• Manage the LP pipeline — tracking interest, meetings, due diligence requests, and commitment status; a detailed pipeline is essential for managing close timing
• Execute LP KYC/AML process — before accepting any LP commitment; collect all required information; verify accredited investor or qualified purchaser status; required under AML programme
• Target the first close — sufficient capital to begin deployment (typically 50–60% of target fund size); announce first close and begin deployment
• Continue fundraising to final close — the LPA will define the fundraising period (typically 12–18 months from first close); equalisation provisions for late-closing LPs