Allocations Knowledge Center
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Allocations Knowledge Center

There are a lot of questions we get asked often, so we figured we'd start writing them down 🙂 We’ll continue adding to this as we get more great questions!

Here are some common questions we get:

P.S. Tap on the "toggle" triangle to see answers! If you're on mobile, tap and hold to open links.

What is Allocations?

At Allocations, we believe in democratizing capitalism.

Our mission is to enable capital to be raised and deployed instantly. We believe every investor should be able to fund their best ideas and make a positive impact. We strive to serve a broad range of investors, not just the elite.

We are empowering the next generation of emerging managers. We have powered investments into world changing companies from space exploration to 3d printed organs.

Take a look at some of the investments Allocations has enabled on our platform!

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Company list

Our current metrics

  • 150+ private funds managed
  • 5,000+ unique investments
  • ~$80m AUM

What are the Allocations values?
  1. Extreme proactiveness: Be uncomfortably proactive. Always be thinking ahead for the customer to clear their path.
  2. Iteration: Make many fast, small improvements over time. Embrace new opportunity and continuous improvement, never being comfortable with the way we've always done things
  3. Transparency: Be radically transparent. We build transparent products
  4. Simplicity: Don't use complexity as a weapon. We build products that are easily understood.
  5. First principles thinking: Break everything down into first principles. Never assume.
What is included in the Allocations SPV?
  1. Formation: We set up the SPV entity and bank account
  2. Simple SPV documents: We provide simple SPV document templates that we have built internally and leverage industry best practises
  3. Compliance: We assist with deal compliance with our exempt reporting advisor product
  4. Investor onboarding: We provide investor onboarding with a super fast standardized process
  5. Deal closing: We assist with wire to the portfolio company
  6. Cap table management: We calculate each investor's interest in the private fund and provide them with an easy to use dashboard to manage their interests
  7. Regulatory filings: We submit Reg D to FINRA and Blue Sky State Filings for each private fund
  8. Accounting & Tax: We assist with calculation of management fees, carry fees and distributions along with annual K1 filings
  9. Distribution: We assist with distributing capital to investors in the private fund upon liquidity event
What is included in the Allocations Fund?
  1. Formation: We set up your fund entity and bank account
  2. Simple fund documents: We provide fund document templates that we have built internally
  3. Fund structuring:
  4. Compliance: We assist with deal compliance with our exempt reporting advisor product
  5. Investor onboarding: We provide investor onboarding with a super fast, standardized process
  6. Deal closing: We assist with wire to the portfolio companies
  7. Cap table management: We calculate each investor's interest in the private fund and provide them with an easy to use dashboard to manage their interests
  8. Regulatory filings: We submit Reg D to FINRA and Blue Sky State Filings for the fund
  9. Accounting & Tax: We assist with calculation of management fees, carry fees and distributions along with annual K1 filings
  10. Distribution: We assist with distributing capital to investors in the private fund upon liquidity event
How much does it cost to set up an SPV?

Simple, straightforward pricing

  • $8,000 for standard SPVs (one time payment - for up to 10 years)
  • $2,000 for adviser as a service (one time payment)
  • +$2,000 for custom requirements (e.g. secondaries / investing into a fund)

The set up costs are deducted pro-rata from the investors in the SPV.

How much does it cost to set up a Fund?

Simple, straightforward pricing

  • $26,000 setup cost (one time payment)
    • Due upon the sooner of the below
      • The fund raises 5x the setup cost or
      • The fund makes its first investment
  • +$4,000 per additional investment
  • +$5,000 for 506c fund
  • +$2,000 per additional close

The setup costs are deducted pro-rata from the investors in the Fund.

What services are included in each fund investment?
  • Calculating annual K1 tax returns for each new investment
  • Providing advisor as a service per unique investment. There are exempt reporting adviser requirements for every investment.
  • Assisting with liquidity event distribution administration per investment
  • Assisting with capital accounts tracking
  • Assisting with markup increase management
Is Allocations the cheapest solution on the market for funds?

A fund with 30 investments typically costs around $150k with Allocations.com which is far less than a lawyer + manual setup

  • Costs are paid pro rata by investors
  • For a $2m - $5m fund that is approx. 0.3% - 0.75% in annual setup fees for a 10 year fund which is very reasonable by industry standard

A common mistake for first time fund managers is to assign the cheapest solution as the selection criteria.

Better selection criteria includes:

1. Speed - Speed wins in venture

2. Software and automation - Important to manage funds at scale

3. Customer support - very important to have responsive partners

4. Compliance - Very important to stay compliant

Why do you charge per investment rather than a fixed fee?

This approach is the most scalable as each additional investment accrues additional work

Pricing Approaches

NameProsCons
Fee based on AUM
- Penalizes the fund for having more AUM - Not related to cost drivers
Flat fee
- Less transparent - Doesn't separate low volume from high volume
Fee per investment (Allocations)
- Scales based on cost drivers (investments) - More transparent - Separates low volume from high volume
When am I billed for funds?

Set up cost: Upon the earlier of:

  • First investment made by the fund
  • 5x the set up cost raised

Additional investments: At the end of each month, Allocations charge a 4K fee for each investment made during that month. You will see each investment listed on the invoice. The process takes a few days to complete, so you might see the amount taken out in the very beginning of the following month.

What is the typical cost for a fund?
  • A fund with 30 investments typically costs around $150k which is far less than a lawyer + manual setup
  • Setup costs are paid pro rata by investors
  • For a $2m - $5m fund that is approximately 0.3% - 0.75% in annual set up fees for a 10 year fund which we have found to be very reasonable by industry standard.
What if we are making $10k investments?

For Allocations.com, the administration work is the same whether the fund invests $10k in a company or $100k in a company.

Allocations has kept a flat $4k fee per additional investment to continue to keep pricing transparent and driven by cost drivers.

Do you provide investor introductions as a service?

No, we do not provide introductions. We do have an investor group community www.allocations.capital - although this is completely separate from www.allocations.com

How do I get started?
  • Click here to start onboarding!
  • Tell us more about the fund or SPV you want to set up on our platform and when you aim to close this deal and we will reach out for the next steps.
  • Please sign our Services after completing the Build process in order for us to get started on your deal.
  • Provide us the investment agreement and other relevant documents.
How do I track who has signed and wired?

Fund managers have access to an internal dashboard that will let them easily track which investors have viewed, signed or wired for the deal. To access this, please log in with the email address you have signed up with. If the dashboard isn't visible on your profile, please contact us.

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What compliance is required per deal?

Most private funds require an Investment Advisor to be legally compliant. More info on

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Investment Advisor
What is included in the Adviser-as-a-Service product?
  • Portfolio Company Existence
    • Check existence of Portfolio Company with applicable Secretary of State;
    • Obtain a certificate of good standing or similar document;
    • Review of press coverage on the Portfolio Company, including by reviewing Portfolio Company’s website and social media; and
    • Research on Portfolio Company’s main team members (CEO and other C-level officers), including by reviewing LinkedIn profiles and other online sources.
  • Market Research on Portfolio Company and Investment Opportunity Analysis
    • Overview of the industry and competitors of the Portfolio Company;
    • Assess Portfolio Company’s weaknesses and strengths in comparison to its industry peers;
    • Assess main risk factors pertaining to the Portfolio Company’s business and the underlying investment;
    • Upon completion of market research, perform a final analysis on the investment opportunity, assessing the potential upside and downside risk in view of the investment objectives of the Fund/SPV.
  • Commercial Terms Review of Legal Documents
    • Commercial terms review of legal documents presented by the Portfolio Company (e.g. SAFE, convertible note, stock purchase agreement);
    • Identify and analyze key commercial terms proposed by Portfolio Company, such as valuation metrics, conversion mechanisms and rights of equity holders;
    • Identify any terms that may be materially detrimental to the interest of investors / equity holders.
How do secondaries work?
  • Investors can opt to sell their ownership stake of an SPV in part of in full. Allocations has so far facilitated approximately $1M in secondary transactions. We are planning to build out an exchange platform for secondary transactions in the future that will expand our capacities.
How do I edit my deal?
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  • Visit the Dashboard and click edit next to the deal you would like to edit.
What are Blue Sky filing fees?
  • Blue Sky laws are state regulations established as safeguards for investors against securities fraud. They need to be paid annually (or per deal based on the state you are in).
  • When we quote you for our services, the Blue Sky filing fees are not included yet. This is because they vary from state to state and thus also differ from investment to investment based on where your investors are located.
  • Once all investors are locked in, Allocations will be able to quickly calculate the exact Blue Sky filing costs. These costs are distributed over the investors in your fund on a pro-rata basis.
What is the process for SPV distribution upon liquidity event?

The general process for SPV liquidation:

  • Upon portfolio company liquidity event, SPV is liquidated and cash paid out to investors assuming there is no lockup period

Reasoning

  • The generally accepted fairest approach to SPV liquidity is for the fund manager to distribute cash to investors upon soonest liquidity event.
    • If the investor would like to rebuy, the investor can choose to buy back on the public market.
  • The nature of an SPV is a single purpose transaction and a way for investors to direct capital into a single investment. If an investor wants to give more discretion upon liquidity events, a fund structure generally is more aligned with fund manager discretion.
I just signed a service agreement, what is the timeline? What happens next?
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Here is an overview of the overall flow and how long each step typically takes. Some deals can get expedited.

How do the investors get onboarded?

After expressing interest in a deal, you will receive an onboarding email.

This email

  • confirms your investment amount
  • contains a link to the the deal page
  • informs you of the signing and wiring timings
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The deal room page contains a data room summarizing the deal information, a tab for signing, entering KYC information and wiring instructions.

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After signing, investors will receive an email with a link to download the investment documents for record keeping.

How do I know when my investors have wired?

All fund managers have their own fund page on the platform. To keep track of who has wired for the deal, click the arrow on the right next to your deal name and you will see a list of which investors have viewed, signed or wired.

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Where can I see the capital commitments? (coming soon)

Do you support offshore funds?

Although we are constantly implementing new products, including offshore funds, Allocations currently solely offers funds structured as Delaware limited partnerships. Stay tuned for our new service offerings!

How do I use NDAs?

Allocations does not currently provide NDAs

Feedback & Questions

(Every two weeks on Thursdays at 11 AM US Pacific time)