Describe the basic flow of money and responsibilities in a venture capital fund.
The core actors are simple: LPs provide capital, the GP manages the fund, and startups receive investments. The mechanics are less obvious. LPs commit money, the GP calls it as investments and expenses arise, and the fund operates over a long horizon because startups take years to mature. Management fees pay for the investing operation. Carry rewards the manager only if the fund produces profits. Reserves let the fund support strong companies in later rounds. These mechanics shape daily decisions. A partner may pass because the fund is late in its life, because the check would be too small to…
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