Beyond First Close: Structuring VC Funds for Longevity

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"Let's not over-engineer for an emerging VC fund."
Dr. Christian Hillebrand (Orbit)

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Structuring a venture capital fund is about far more than getting to first close. It’s about building a vehicle that can withstand regulatory scrutiny, support long-term growth, and align with investor expectations from day one.

Key decisions around fund domicile, legal setup, licensing, and investor communications all carry strategic weight.

When approached thoughtfully, even first-time managers can establish a credible, scalable structure that sets the foundation for future fund generations.

Jurisdiction Must Align With Substance

“Some countries don’t care about fund location too much. Others do very much, especially if you're based in Germany.” - Dr. Christian Hillebrand

Where your GP is physically based should guide where your fund is domiciled. This is not just about LP perception - it’s about real tax risk. For example, if you’re managing your fund from Germany but domiciling it offshore, German tax authorities may treat it as a German fund anyway, creating legal headaches for you and your investors.

✅ Best practice: If your team is in the UK, use the UK. If you’re in Germany, use Germany or Luxembourg, and avoid offshore options like Cayman unless you're managing global institutional capital.

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Don’t Build for BlackRock

“Let’s not reinvent the wheel… Keep it lean and simple.”
-Dr. Christian Hillebrand

Fund managers often overbuild, setting up parallel vehicles, feeder funds, co-investment layers, and more. These structures only make sense if you're managing hundreds of millions, not €10–50M.

✅ Instead: Stick with the standard limited partnership structure. Use side letters to accommodate LP-specific needs rather than spinning up new entities.

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🧭 Problem vs. Solution: Christian’s Guide

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Build It Right - So You Can Build It Again

"Think about what still works when you’re raising your third fund- not just your first." -Dr. Christian Hillebrand

Whether raising €10 million or €60 million, the structure behind the fund must be deliberate, compliant, and easy to understand. Simplicity outperforms complexity, especially in early fund generations. Clear governance, regulatory foresight, and honest investor materials are non-negotiables.

A well-structured fund doesn’t just reduce friction, it builds trust, allows for repeat capital, and lays the groundwork for a long-term franchise.

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TL;DR:

• Fund structure: Stick with proven LP-GP setups. Don’t add feeders or blockers unless investors demand it.

• Jurisdiction choice: Align with where your team works and where your LPs are based.

• Licensing: Sub-threshold AIFM licenses are quick (<2 weeks in Germany); rented AFMs are valid if they understand VC.

• Marketing: Reverse solicitation exists, but don’t abuse it. If you have 50 investors via "reverse," it’s not credible.

• LP relations: EIF and public LPs are powerful, but require 9+ months of diligence and strict legal discipline.

• Key person & team rules: Draft proper vesting, exit clauses, and governance early - don’t delay until problems arise.

Resources

Access the resources crafted specifically for this session below.