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Fund Formation

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Fund Formation

Our Fund Formation group strives to ease the burden alternative asset managers are facing in the start-up phase and make the insurance procurement process as simple and smooth as possible.

We understand the start-up phase for fund managers can be an exciting but stressful time. In most cases, general partners are tasked with several to-do items, including:

  • Key vendor selection
  • Drafting formational documents
  • Working through regulatory filings

Additionally, alternative asset managers must begin the process of procuring insurance to meet immediate business needs and to comply with contractual and regulatory mandates. Our Fund Formation group has been established to relieve the burden alternative asset managers are facing in the start-up phase and make the insurance procurement process as simple and smooth as possible.

Businessmen planning

How Vanbridge Can Help

  • Creating an insurance procurement plan that prioritizes insurance needs.

  • Proper budgeting and cost allocation

  • Mapping out insurance implementation and timelines based on launch date

In addition, alternative asset managers can take full advantage of Vanbridge’s proprietary and unique insurance offerings, which are the most cost-effective and comprehensive solutions available in the market:

  • Dividend-bearing Workers’ Compensation insurance facility, typically reserved for middle market managers.

  • Executive Risk facility with a manuscript combined D&O, EPL and fiduciary policy form tailored to private equity, hedge funds and venture capital-owned portfolio companies and supported by major A rated insurance carriers.

Protecting The Fund

Alternative Asset Management firms face specific exposures. Experiencing indemnity or financial solvency losses could devastate any firm and the portfolio companies associated with it. As a result, Private Equity, Venture Capital and Hedge Funds need to protect themselves as well as safeguard fund performance.

Exposure Considerations:

  • Investigations by the U.S. Securities and Exchange Commission (SEC)

  • Limited partners filing lawsuits because of misleading documents or mismanaging funds

  • Indemnification provisions in portfolio companies and addressing private fund indemnity obligations to its general partners and board of directors

  • Inadequate due diligence

  • Liability stemming from key vendor selection and counterparty risk

  • Bankruptcy

  • Backing out of investment deals

  • Employment practices

  • Conflicts of interest between the firm and portfolio companies

  • Accusations that the PE or VC firm has either neglected or mismanaged the portfolio company

  • Corporate governance issues in the firm or the portfolio companies

  • Vulnerable intellectual property (IP) and private information

  • The Financial Stability Act of 2010

  • Administrative errors and omissions and the cost of correcting trade mistakes/errors

Vanbridge assists in evaluating these various liability risks and exposures and helps tailor a program to meet the unique needs and risk profile of each fund.