Class A: 10% pref dividend; 0% equity
Class B: 5% pref dividend; 60% equity
Class C: 0% pref dividend; 20% equity
I am a corporate technology lawyer experienced in setting up venture funds and acting fur funds in their "portfolio" investments. Always happy to see new innovative approaches to investment funds. The above offering can be done. I suspect it would require more "maintenance" on the fund level and investment level but definitely do-able.
The simple answer is yes, as long as the terms are consistent with the offering and other documents that discuss fees. It gets more complicated if you plan to sell to non-qualified/accredited investors, at which point the fees would also need to be reasonable and fair as well. In either case, fees should be competitive with other similar offerings investors might be able to access, and expect that they will almost always be a point of negotiation with any large investor.
Yes, a fund could have different fee terms. One way to do it is like you've asked in your question, identify different share classes, each with different terms. I've seen offering prospectus' with all of the share classes included and I've also seen these structured with a separate offering document for each share class. Which one is best will depend on what you are trying to do and which attorney you decide to hire. The third, albeit less preferred way is to have a side letter with an investor outlining different terms. This is less clean and could scare away some investors because it is much more difficult to evaluate ones position in a fund if there are side letters floating around with different terms. Hope this helps - let me know if you have additional questions.
Yes, you can structure an investment fund to offer different returns or fee arrangements. If your fund is structured as a corporation, you could issue different share classes with varying voting rights, equity interests, preference rates on dividend distributions, etc. If the fund is structured as an LLC taxed as a partnership, the LLC operating agreement can provide for different classes of LLC membership units, which provide for different allocation methods.
