A adjustment of my net asset allocation is to reduce contact with closed venture capital funds, while increasing the distribution of open venture capital funds. The closed venture capital fund follows the traditional model: you make capital, funds call, and rely on ordinary partners to make good investment options.
There are four main reasons for the transformation from closed to open funds (also known as Evergreen Fund):
- Reduce costs: Traditional closed venture capital funds charge 2 % -3.5 % of management assets, accounting for 20 % -30 % (carrying) of profit. In contrast, many open venture capital funds have less than 2 % of the income and expenses of management assets.
- Greater liquidity: Open venture capital funds provide the flexibility of withdrawing capital when needed. DeepSeek’s panic reminds people that there are choices very happy. In contrast, exiting closed funds is impossible or very difficult, thereby reducing liquid.
- Visible to investment: With the help of open funds, you can see the investment portfolio holding before investing, so that you can understand your investment. Successful investment.
- Easier: The metropolis of a closed fund is usually a metropolis, which may be caught off guard. Open funds are simpler-you only invest in funds that can be promised at that time, so that the process becomes simpler and predictable. In addition, some open funds provide 1099 units instead of more complicated K-1 to submit tax submission.
Distribute more to the catalyst for open venture capital investment
In early 2025, I missed the closed venture capital fund I invested at $ 20,000 in capital calls. This marks the third missed capital call in just 18 months, which highlights that I do not have the duties as a limited partner.
One of the main reasons for this situation is that I struggle to manage emails. I always send large -scale calls through emails, and I was drowned by the news, mainly due to the running financial warrior. I am currently a limited partner of eight private funds, seven of which are closed venture capital or debt funds. As a result, the capital call may be in trouble.
Fortunately, I have transferred some cash to my Fidelity Brokerage account, but I have not invested all. When the fund notified me without call, I had to send a $ 100 test to the bank of the venture capital fund to ensure that everything was smooth. After confirming that the fund had received the transfer, I had to send the remaining $ 19,900.
How troublesome, especially when I have a winter vacation with my family. The older my age, the more I think it is to simplify my investment through the reduction of financial peace of mind.
Manage cash flow may be tricky
Since my wife and I have no daily work, we have no stable cash flow. Therefore, it is difficult to manage a closed venture capital fund that is difficult to predict capital calls. As a person who likes to use a broken mentality, I often find that I do n’t have a lot of cash to be backup.
If you also find that you have no stable cash flow or a lot of cash, then investing closed funds may not be suitable for you. “Question” is that once you invest in a closed fund, you are usually invited to invest in other funds.
The more passive investment, the better. However, investment -closed venture capital funds are proven to be more active than I originally expected.
Ben Miller, CEO, discussed on an open venture capital fund
In the recent conversation with Ben Miller about the opportunity of residential commercial real estate investment opportunities, we continue to discuss the Innovation Foundation and the successful IPO (TTAN), which is one of their shares. I decided to divide the dialogue into two parts for digestion.
If I plan to establish a position of more than $ 500,000 in open funds to get more private AI companies, I want to fully understand the fund’s operation method.
This is some of the questions I raised in the discussion:
- What will happen to private companies that have been listed on the public? How will this affect the fund?
- Is it more difficult to determine a promising company or actually invest in the company?
- How do fund raising and other venture capital companies compete for investment in private companies?
- How to manage risk management in investment?
- What is the process of writing a check investment company?
- If you do not have cash on hand, how to get the credit amount of the company’s investment?
- How do you provide liquidity to investors of Innovation Fund?
- How can you determine the size of the fund you want to run?
Transfer more capital to open risk funds
Since 2001, I have been angel investors and private fund investors. Since then, due to the platforms such as such, witnessing that retail investors have evolved in private investment, it has been fascinating FundraisingLong -term financial warrior sponsors.
Their venture capital products charge 1.85 % of management fees (while traditional funds are 2 % -3.5 %) without carrying (compared with typical 20 % -35 % profits). The minimum investment is only $ 10, which is in sharp contrast to the minimum limit of most of the minimum of $ 100,000 for most private funds. Finally, they sent 1099s instead of K-1.
From now on, I decided to stop allocating capital to closed venture capital funds until my existing capital returned capital. If I continue to invest closed funds at the current speed, in the next ten years, I will eventually receive more than 20 funds-this situation will make me crazy.
Managing the financial situation of my family is sometimes like a part -time job. Increasing more complex performance is not attractive to me. When each closed fund is over, I no longer need to submit their K-1!
Open venture capital funds provide more practical solutions. If I have cash that can be used for investment, I will. If I don’t do this, I will only wait for me.
Of course, if a top venture capital company like Sequoia invites me to participate in their friends and family rounds, I am happy to accept it. However, because it is unlikely to invite invitations, I am committed to new methods for investing in private companies in the future.
Subscribe to the financial warrior
Listen and subscribe to the financial warrior podcast apple or SpotifyEssence I interviewed experts in their respective fields and discussed the most interesting themes on this website.
In order to speed up your financial freedom, please add more than 60,000 people and subscribe to Free financial warrior communicationEssence Financial Samurai was founded in 2009. It is today’s leading and independent personal financial management.
