Setting up an RUV

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How to submit an RUV application

When you are ready to submit your RUV application, go to ruv.new

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RUV Guidelines

There are certain regulatory, compliance, and operational limitations that define what type of investment we can support. When you submit a new RUV, our team reviews these parameters to ensure fit. Generally, we can support most private venture backed companies incorporated in the U.S., U.K., Canada, Cayman Islands, or Singapore.

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For companies incorporated outside of the U.S.:

Company Jurisdiction			Who can Invest?*
U.S.	🇺🇸		Anyone
U.K.	🇬🇧		Anyone, except residents or citizens of the U.K.
Canada	🇨🇦		Anyone (except Canadian investors). Canadian investors when specific criteria are met
Cayman Islands	🇰🇾		Anyone, except residents or citizens of Cayman Islands
Singapore	🇸🇬		Anyone, except residents or citizens of Singapore

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What type of company cannot be supported by an RUV?

• We may have limited support for companies incorporated outside the U.S., U.K., Canada, Cayman Islands, and Singapore. Exceptions for certain countries could be considered on a rolling basis (subject to different pricing). Reach out to discuss\!
• Investments described as following a pure private equity strategy rather than a venture capital strategy.
• LLCs
  • We can proceed with the RUV application if the company is willing to sign the following LLC Conversion Letter
• Crypto tokens and certain forms of hybrid crypto and equity instruments.
  • Depending on the terms of the warrant, we can occasionally support them (additional fees may apply)
• Investing in Secondaries & other Venture Funds.
  • RUVs cannot support these investments. You can read more about this here.

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What Token Warrants are supported?

We generally support Token Warrants through the RUV only under very specific circumstances, which include:

• The token warrant purchase price + exercise price must be less than 20% of the RUV.
• The token warrant provides for cashless exercise.
• The portfolio company agrees to custody the tokens and acknowledges that the RUV will not take custody or manage distributing the tokens.
• We include a disclosure on the deal page that reads:

Part of this RUV investment will go towards the purchase of a token warrant. There is no guarantee that the token warrant will ever become exercisable, and if there is an exercise event, that the RUV will exercise the warrant. AngelList will determine, at its sole discretion, whether the RUV will exercise the warrant and may refrain from exercising for any reason, including but not limited to instances in which it is impracticable to do so. Future decisions regarding the liquidation, trade, or management of the resulting tokens will be made by [Proxy Holder Name], as proxy holder for the RUV. This poses a conflict of interest as [Proxy Holder Name] is the [founder/CEO] of the company issuing the tokens.

In addition to the above, there are also narrow distribution mechanics that are worth noting.

• If distributing tokens in-kind to the RUV investors, the portfolio company will inform AngelList & get sign off before distributing, as this has tax consequences.
• Any token distribution must be made pro-rata (matching the % ownership in the RUV) and evenly to all RUV investors in parallel.
• For a cash distribution, the tokens will need to be sold for USD, with the proceeds sent to AngelList for distribution to investors.

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No “bad actors”

The founders or key people associated with the company cannot be a “bad actor” pursuant to SEC and AML standards.

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Is there a minimum that has to be raised?

RUVs must raise a minimum of $40k in order to close, from a minimum of two investors and the minimum check size per investor is $1k.

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Are there restrictions on the number of investors?

• If the RUV is raising less than $12M - up to 250 investors and a minimum of two investors.
• If the RUV is raising more than $12M - up to 99 investors and a minimum of two investors.

For regulatory reasons, any RUV needs to have at least 2 entities to invest. Raising from just one entity would not make it a pooled vehicle. We also usually reserve 3 spots in case an LP needs to split their investment (due to divorce, death, etc.), so the practical limits are 247 and 96 LPs, respectively.

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Requirements for International Companies

Non-U.S. companies need to make tax representations (PFIC & CFC) & sign a side letter with the fund.

In an attempt to tax income generated abroad and fight tax evasion, the IRS enacted several rules that U.S. taxpayers, or U.S. incorporated funds for that purpose, are subject to. Two of those rules are particularly important for your RUVs - the Passive Foreign Investment Company taxation regime (“PFIC”) and the Controlled Foreign Corporation status (“CFC”).

In order for your RUV to file its taxes correctly and for your investors to file their taxes correctly, we need to know:

1. Whether the company you’re investing in is a PFIC or a CFC;
2. Once the company becomes a PFIC or CFC;
3. Certain additional information for tax returns, should the company be a PFIC or CFC

Sometimes companies will make representations about their PFIC/CFC status in their main investment docs (usually in the “Investor Rights Agreement”). If not, we can capture these representations via our standard tax side letter:

Founder GuideBook Tax Reps example.pdf

In short, by signing the letter, the company represents that it is neither majority-owned by U.S. persons and that they don’t earn a majority of their income from rent or interest (i.e. aren’t a passive income generating company). The second part of the document lays out what they would need to report if they ever became a ‘passive foreign investment company’.

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How fast can AngelList set up my dashboard?

Once we have all of the information we need and have confirmed we are able to run your RUV, we can typically make your dashboard live within 1-2 business days.

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When do I share Investment Documents?

When closing, we will need the investment docs to review & sign.

Investors in the RUV are not signing the investment docs when they commit to the RUV. Instead, they are electronically signing documents that subscribe them to a special purpose vehicle (SPV). You can see an overview and see a sample set of the docs in the following sections.

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Overview of the docs

Investors electronically sign documents (through the platform) that subscribe them to a special purpose vehicle (the RUV). This closing packet consists of:

1. The (RUV) Partnership Agreement - This is where the parties establish respective rights and obligations to the fund, as well as the rules, processes, and procedures that shall govern the business and affairs of the fund.
2. The (RUV) Subscription Agreement and Privacy Notice - This document outlines the mechanics that surround the flow of funds to the RUV.
3. The Private Placement Memorandum (PPM) - The PPM describes the terms of the offering, details about the investment vehicle, and the risks of the investment, among other things.

test-comp-closing.zip

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Fees and Economics

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Equity Companies

RUVs incur two sets of fees — setup fees and state filing fees.

• Setup fees for standard U.S. companies and raises is $8k. It can vary if your comapny is incorporated outside Delaware, Texas or Nevada, or incorporated internationally, or raising a convertible round.
• State filing fees vary (~$1k total) and are based on the investor mix (U.S. States they are a resident of). AngelList files and pays on your behalf, and passes through the cost to the company.
• All fees are due at RUV’s close and paid directly by the company (not deducted from the raise).

* All RUVs are subject to pass through state regulatory fees called Blue Sky Filing Fees.

* RUVs for non-standard companies or raises may incur additional fees to cover admin, tax and compliance requirements.

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State Regulatory Fees

• State and provincial regulatory filings are required by securities regulators in the U.S. and Canada. In the U.S., state regulatory fees are known as blue sky filing costs.
• These regulatory fees vary based on the geographic makeup of investors in the RUV. The total median fee is around $1.2k, but can range up to$6k.
• States and provinces may increase their regulatory fees year-to-year.

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How are State Regulatory Fees Determined?

Blue sky laws differ from state to state, so the fees will vary depending on the geographic makeup of investors in the RUV. We’ve included a breakdown of state-by-state blue sky filing costs at the bottom of this article. Canadian filing fees are similar, varying province-by-province.

We calculate the fee for each investor in your RUV based on where their investing entity is located. This means the filing fees increase with each additional investor, and the cost for each investor will vary depending on the location of their investing entity.

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What are Blue Sky Laws?

Blue sky laws are state-level regulations intended to protect investors against securities fraud by requiring certain securities issuers (e.g., funds) to register and disclose the specifics of the security offering. Most of our RUV offerings qualify for blue sky law exemptions, but do not bypass state filings. To learn more about blue sky laws, read our Education Center article.

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Regulatory Filing Fees by Location

Unless stated otherwise, the filing fee is charged if any investors from that state or province invests in the RUV.

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How long can I keep the RUV open?

Most RUVs close within 3-6 months to ensure they finalize their gathered commitments. Keeping an RUV open for longer, risks losing investor allocations and commitments. Further, as an investment advisor, we’re required to maintain fair investor treatment standards.

That being sad, extension beyond 6 months may be considered in exceptional circumstances.