VC10X - A Fund Lawyer's Honest Answers to the Questions GPs Google at 2am - Yoni Tuchman, Partner, DLA Piper

Yoni Tuchman returns to VC10x for his third appearance — and this one might be the most practical yet. If you're an emerging manager raising a fund, structuring a GP commitment, or trying to figure out what you can and can't say publicly about your fund, this episode is required listening.

⭐ Sponsored by Podcast10x - Podcasting agency for VCs - https://podcast10x.com

Links to previous VC10X episodes with Yoni:

1. Fund Formation 101 - https://www.youtube.com/watch?v=6eLPeQDPjCo

2. The Legal Landmines Hiding Inside Your Fund Docs - https://vc10x.beehiiv.com/p/the-legal-landmines-hiding-in-your-fund-docs-yoni-tuchman-partner-dla-piper

All these episodes can be listened to independently, but if you are a GP, I recommend you listen to all 3 (in any order).

We cover:

— 506(b) vs. 506(c): the legal line between building in public and breaking your fund exemption

— Why Yoni tells almost every client not to warehouse deals — and what to do instead

— The cashless GP commitment: how cash-poor managers can fund their commitment without writing a check

— Side letters: what to push back on and how to find the version that works for both sides

— Removing a non-performing GP partner without blowing up the fund

— Venture partner compensation: carry yes, management company equity never

— Rapid fire: the most overrated legal document, the biggest Fund I money-waster, and the one clause every GP should delete

LINKS:

DLA Piper - https://www.dlapiper.com/en

Connect with Yoni - https://www.linkedin.com/in/yoni-tuchman-58153b5/

Connect with Prashant: https://linkedin.com/in/choubeysahab

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Timestamps:

(00:00) - Preview

(01:02) - Introduction to the episode and guest, Yoni Tuchman.

(03:00) - Deep Dive: Differentiating between 506(b) and 506(c) fundraising rules.

(04:47) - Defining what constitutes a "preexisting relationship" for fundraising purposes.

(07:11) - How to navigate fundraising conversations at conferences without violating 506(b).

(11:03) - The mechanics of pivoting from a 506(b) to a 506(c) offering (and why you can't go the other way).

(13:17) - The historical downsides of 506(c) and how recent SEC guidance has changed the calculation.

(17:42) - The new, lower-friction rules for verifying accredited investors under a 506(c) offering.

(21:38) - Best practices for what to say (and not say) when publicly fundraising under 506(c).

(24:55) - How to legally structure warehousing deals to transfer them to the fund later.

(32:00) - A streamlined alternative: Using the fund itself as the warehouse for early deals.

(35:53) - Using a cashless contribution (waiving future management fees) to fund the GP commitment.

(40:10) - The complexities and potential clawback scenarios of using a fee waiver.

(44:01) - An LP's perspective on a cash-poor manager using a cashless contribution.

(49:15) - Why LPs should be supportive of GPs using tax-efficient cashless contributions.

(51:18) - The most burdensome side letter requests and how to negotiate them.

(54:56) - The legal mechanism for removing a non-performing partner without disrupting the firm.

(58:33) - Structuring compensation for venture partners and advisors: Fund-level carry vs. deal-specific carry.

(01:00:44) - Start of the rapid-fire round.

(01:01:01) - The most overrated legal document in fund formation.

(01:01:12) - The biggest waste of money for a first-time fund.

(01:01:44) - The one standard clause every GP should push to delete.

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