Case 13Venture capital fund formation in Nigeria
Forming a venture capital fund for the founders of a new Nigerian VC firm.
A first fund sets the template for every fund after it. The founders needed a structure that Nigerian regulators would accept and that local and international investors would recognise.
- Client
- Founders of a venture capital firm (confidential)
- Sector
- Venture capital
- Practice
- Venture & Technology
- Jurisdiction
- Nigeria
The brief
Our clients were the founding partners of a venture capital firm preparing to raise their first fund to back early-stage Nigerian technology companies.
They needed the fund and its manager set up correctly from the start: the right vehicle, the right regulatory status, and terms that would hold up in front of institutional investors.
Our advice
- 01
Fund vehicle
Advising on the choice of fund vehicle, comparing the available partnership and company structures for tax transparency, liability and investor familiarity.
- 02
Manager and regulation
Structuring the fund manager and guiding its registration and compliance obligations with the Securities and Exchange Commission.
- 03
Fund terms
Drafting the limited partnership agreement or constitutional documents, covering fund term, investment period, management fees, carried interest and the founders’ own commitment.
- 04
Founders’ arrangements
Documenting the relationship between the founders themselves, including ownership of the manager, sharing of carry, vesting and departure.
- 05
Investor documents
Preparing the private placement memorandum, subscription documents and side letter framework for incoming investors.
Outcome
The founders launched with a fund structure and manager that met Nigerian regulatory requirements and gave investors terms they could recognise and commit to.