Adding/Managing Fund Manager / GP Capital

Updated 6 months ago by Sanjay Vora

With customizable funds, there are significant benefits with utilizing manager/GP capital in the fund. Read on to learn more.

Since customizable funds track both the time and % ownership, unlike traditional syndication models or customizable funds, you get compensated for the amount of time that your capital was being used in a deal.

Lets take an example. The fund managers are trying to raise $2,000,000 in equity from investors to close on a deal but they are short by $300,000. Instead of scrambling to find investors, the fund managers use $300,000 of their own capital. The acquisition closes and the managers then allocate $1,700,000 to investors leaving $300,000 as units available. The managers can now allow future investors to get allocated into this deal until all $300,000 is allocated to investors at which time the fund managers have received their capital back. The amount of time that the managers had invested in the deal is tracked by Avestor's platform and the fund managers will still receive their share of earnings and gains based on that time.

So how do you do it, you ask? Here are the steps.

  1. Fund managers should deposit capital first into the Management entity account
  2. Then transfer the capital from the management entity account to the fund account
  3. Log into Avestor's portal and record the capital deposit for the GP/Manager. The funds will now show up in your cash balance.
  4. Close on the investment. Between investor capital deposits and the manager deposit, there should be sufficient funds in the fund bank account.
  5. Allocate the slices to investors leaving the remaining slices to the manager/GP account. These slices can now be allocated to future investors seeking to be part of the opportunity.
  6. As investor capital gets deposited and allocated to the deal, the system automatically tracks and returns the manager/GP capital back to the manager.

That's it. Pretty simple.


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