
Rolling Funds - jonas_kgomo
https://rolling.substack.com/p/rolling-fund-faq-what-is-a-rolling
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rdlecler1
I might be missing what is novel here other than a cool name and interface. We
(AgFunder.com — a Fund focused on foodtech & agtech) launch a new fund every
6-12 months with a 6 week offering period, precisely because we can
effectively take capital at any time. Investors range from individual, family
offices, and corporates.

We went from $0 to $30m AUM in two years over five funds. For a given
investment, we generally invest out of multiple funds (typically 2-3) that
have capital to deploy and have a simple formula based on target check size to
deal with tight allocations. We’ve written checks as low as $100k and as high
as $1m.

For our fund admin, we use Assure Fund Services which costs about $15k to set
up each vehicle with 10-years of k-1 and admin services. They also manage the
bank account. Assure used to run angellist’s SPVs.

With so many funds and LPs (>250) we built a reporting tool that builds a
quarterly report for each LP based on the funds they’re invested in and what
companies those funds are in.

This has removed a lot of cyclicality you see in funds where you are either
fundraising or investing. We have mostly inbound, do very few in person
meetings, and if you prefer to wait you can see our progress and come in in
the next Fund in six months. The relationships with the LPs are great and many
are far more sophisticated than institutional LPs because they often know the
space better. Still, I don’t see institutional LPs stepping into this for a
long while. They’re very very conservative and like things done like they’ve
always been done (no wonder VC has such poor performance as an asset class).

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RollingFund
Two of the most interesting aspects of rolling funds: they're publicly
marketable under 506(c), and they remain open to new investors. There's no
funding window or offering period, so existing LPs can pause, increase, or
decrease their capital contribution from quarter to quarter. It also looks
like the platform works handles a lot of the "paperwork" to operate a fund, so
fund managers can primarily focus on fundraising and investing.

~~~
rdlecler1
We do ours under a 506c, and given that we can create a new fund with any
frequency, they also remain open to new investors. It seems the funding window
is still that quarter. If you miss that funding window you invest in the next
quarter which gives you exposure to a different window of companies. I feel
like I’m still missing something here.

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dzink
The aggregate fees are quite high (1.5%+2% of contributions every year in
management fees alone) and while larger funds may pull this off occasionally
partly due to signaling, you are not getting exclusive access to the startups
with this setup. What justifies the high recurring fees other than the fact
that AngelList was first to build the piping? Do they have a role in filtering
the startups, or exclusive access? When public markets are all moving to index
funds/ETFs because of the low management fees, how do you justify doubling the
cost for investing in startups?

~~~
RollingFund
Some rolling funds actually have 0% management fees (only carry), so it's
really up to the fund manager. It also looks like the admin fee is 0.15% per
year for a ten-year term to access the platform. There's no additional carry
if you bring your own LPs, and 5% carry for LPs that come through the fund
platform.

