A management company is an entity (typically an LLC) that is created for the purposed of managing the operations of a venture capital fund. This includes collecting management fees, paying out and accounting for operational expenses (i.e. marketing or business travel), organizing employment or other business agreements, and handling regulatory filings. Facilitating these activities through a management company protects fund managers from complete liability when it comes to the fund’s activities.
The management company is typically created and owned by one or multiple fund partners. The latter is known as a multi-member management company.
How do you create a management company?
Setting up a management company is a fairly straight forward online process. Sydecar customers typically use the Delaware Registered Agent website to create their management companies as an LLC registered in Delaware.
You should also plan to set up a distinct bank account for your management company that is used to collect management fees and pay out partner and contractor compensation, operating expenses, etc.
We recommend consulting with a legal, tax, and/or accounting professional to understand all of the nuances of running a management company.