Glossary - Fund Lifecycle
The Fund Lifecycle refers to the stages a venture capital, private equity fund, or any investment fund goes through from its inception to its wind-down. These stages typically include the establishment of the fund, the period of active investment into portfolio companies, the management and further investment or divestment phase, and finally the fund closure, where returns are distributed to investors.
Also known as
- Investment Fund Lifecycle
- Fund Stages
Use cases examples
- Limited Partnership Agreement: This Agreement outlines the lifecycle of the Fund, specifying the Initial Closing Date, the Investment Period during which the General Partner may call committed capital, and the Final Closing Date after which no further investments will be made.
- Annual Report to Investors: The report provides an update on the Fund's stage in its lifecycle, detailing the investments made, the current portfolio value, and the expected timeline for exiting the remaining investments and returning capital to Limited Partners.
Considerations for investors
- Investors should assess the management team's track record in managing the fund through its lifecycle stages, focusing on value creation and exit strategies.
- Monitoring the fund's stage can influence an investor's decision to commit additional capital or to participate in subsequent funds managed by the same team.
Considerations for founders
- Understanding the investment timeframe of a fund can help founders align their company’s milestones and fundraising needs with the right investment partners.
- Founders should consider the impact of a fund's lifecycle on the speed of investment decisions and the availability of follow-on funding.
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