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For Investors

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What happens after we’ve received the funds?

After the RUV is finalized, investors receive a fully executed LPA, PPM, subscription agreement, investment statement, and signature certificate from their investor Dashboard.

Investors can see these documents by navigating to their AngelList investor dashboard, and going to Portfolio > Company Name > Investment History.

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Will AngelList Produce K-1s for investors?

The RUV will issue a first-year K-1 to all investors. This K-1 will typically reflect $0 of gain or loss, but is required under US tax rules. The RUV will only issue a K-1 in subsequent tax years if there is a disposition event or other reportable tax activity at the RUV. This frequently doesn’t occur until the company exits or has another liquidity event.

A timeline for K-1 delivery to investors is available here.

Investors can find their K-1 via their AngelList dashboard and can contact invest@angellist.com if they have questions.

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Can investors transfer their interest in the RUV?

Transfer restrictions in connection to LP’s ownership in the RUV are delineated in Article 6 of the LPA. We generally only allow transfers at the individual LP level in extenuating circumstances for estate planning (divorce, death, etc.). We strongly recommend that investors invest with entities that will hold the interest for a long time and not rely on a transfer. (I.e., a couple should invest with a jointly owned entity or each invest privately, rather than transferring interest in the RUV.)

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For the Company

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Will AngelList make the Form D Filings?

Yes, we will file Form D for the RUV. Form D is a form to be used to file a notice of an exempt offering of securities with the Securities and Exchange Commission. Commission rules require the notice to be filed by companies and funds that have sold securities without registration under the Securities Act of 1933 in an offering based on a claim of exemption under Rule 504 or 506 of Regulation D or Section 4(a)(5) of that statute.

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Will AngelList pay the state regulatory fees?

Funds SPVs and RUVs on AngelList incur variable state and provincial regulatory fees - you can read more about this here.

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Who signs on behalf of the RUV?

We provide you with a contact address [portfolio@angellist.com] that your legal team can use to request signatures. Our legal team will review each “post-close action” (each signature request your RUV is receiving) to understand how that post-close action affects the RUV’s rights. This review takes 2 full business days from the moment we have all necessary documents. If we have signed a proxy agreement, you may just be able to tell us how to vote the RUV shares for normal corporate actions.

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If the RUV received Pro Rata Rights. How does this work?

The pro-rata rights for RUV are offered at the fund level. This means that to enable RUV to invest its pro-rata amount, you would need to establish a new affiliated vehicle. This new entity would be subject to the same restrictions and requirements as the initial RUV (such as a $40k minimum investment and at least two investors). If there’s excess allocation not used by existing LPs, you can allow other new investors to participate in the new RUV’s allocation.

In the event that the company documents state that the failure to invest the RUV’s pro-rata amount in the follow-on round would prevent the shares from being converted to preferred shares, the company may agree to exchange common shares for preferred shares without requiring additional considerations.

Generally, instead of offering contractual pro-rata to the whole RUV, you could also just set aside an allocation in the next round for the individual investors who have been most helpful and create another RUV.

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What happens if the company gets acquired?

If the company gets acquired, the RUV will hold consideration in connection with the merger.

To process this acquisition our team requires the distribution waterfall (or consideration information for the fund). To begin the process, please, send all related transaction docs and the distribution waterfall if available, for our team to review.

For publicly traded stock, once the lock-up period expires, funds will either be liquidated or distributed in kind on a pro-rata basis to investors, depending on the value of the shares.

If the value of the shares exceeds $125k, we will offer an in-kind or in-cash election (whereby investors can elect to receive their pro-rata consideration as shares or cash).

If investors decide to receive the shares in kind, investors will have ten business days to make an election and provide the necessary brokerage details to execute share transfers. After ten business days, the elections will be sent to our broker; any investor who fails to make an election within that time frame will have their pro-rata consideration of shares liquidated to cash.

To transfer shares in-kind our broker charges a minimum flat fee of $6,250. The fees are paid directly from the distribution amount before any shares or cash are distributed to limited partners. Once the fees are covered using liquidated shares, any remaining distribution amount is then distributed among the LPs, either in the form of shares or cash, depending on the terms of the distribution agreement.

If the investor decides to receive their distribution in cash, our broker charges between $0.01-$0.04 per share to liquidate shares (dependent on the share price).

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What happens if we shut down the company?

If the company is no longer operational, we will need a copy of the company’s Certificate of Dissolution and distribution waterfall. If funds need to be distributed back to investors, our Distribution team will create the distribution model and send it to our Tax team for review. Upon completing the internal reviews, you will receive an email with the distribution preview attached for your review and approval. The distributions will be executed after your approval has been received and will be deposited into investors’ AngelList accounts.

If we do not receive your approval on the distribution after 3 follow ups, we will proceed with the distribution.