Comprehensive Support in Fund Formation

Client

Our client, I/O Fund, is a syndicate made up of investors who pool their capital to invest in various opportunities, including startups, real estate projects, and venture capital deals.. 

Problem

The client required legal guidance in setting up an incorporated syndicate for investing in startups, where individual investors pool their resources to invest as a single entity in multiple startup companies.

Approach

Establishing an investment syndicate for the client required careful planning across legal, financial, and operational dimensions. We advised the client on a well-structured approach to follow, which ensured regulatory compliance and sound investment practices. 

1. Determining the Syndicate Structure: Based on the client’s specific goals and investment strategy, we advised the client on the best legal structure for the investment syndicate emphasizing operational flexibility and simplified taxation. We then proceeded to register the investment syndicate with the relevant regulatory authority.
2. Establishment of Governance and Management Roles: We advised the client on the need to assign roles for managing operations, such as a general partner or lead investor who evaluates opportunities and leads investment decisions. The role would also entail providing regular updates to syndicate members on performance and new opportunities.
3. Preparation of the Syndicate Agreement: We prepared the syndicate agreement which outlined the responsibilities of each member, including a lead investor. The syndicate agreement also defined the terms of investment such as minimum contributions, investment timelines, and decision-making protocols. The syndicate agreement further sets the rules for how profits, dividends, or carry (share of the profits) will be distributed among members as well as possible exit strategies.
4. Investment Documents: We prepared other ancillary investment documents, such as term sheets, side letters, and due diligence checklists, to be used by the syndicate to standardize the process of investing in startups.

Result 

We successfully set up the investment syndicate and prepared the necessary documents needed for them to effectively operate and adhere to sound investment practices.