LPC Fund I aligns GP and LP economics through tier-graded management fees, an 8% hurdle, full GP catch-up, MOIC-disciplined deal targets, and a 100% offset of all transaction, advisory, director, and Bolivia operational fees against Management Fee. The GP's Bolivia economics are limited to Carried Interest only.
Tier assignment is fixed at the time of the LP's initial commitment and persists through the life of the Fund. The GP may aggregate Capital Commitments from related LPs at GP discretion. Subsequent increases that cross a tier threshold reassign the LP to the higher tier on a prospective basis.
| Step | Mechanic |
|---|---|
| 1 · Return of Capital | 100% to LP until cumulative distributions equal aggregate Capital Contributions. |
| 2 · Preferred Return | 100% to LP until LP has received an 8.0% annualized preferred return, compounded annually, on the average daily balance of unrecovered Capital Contributions. |
| 3 · GP Catch-Up | 100% to GP until GP has received 17.5% (Tier 1) or 20.0% (Tier 2/3) of all distributions made in Steps 2 and 3 combined. |
| 4 · Residual Split | 82.5% / 17.5% (Tier 1) or 80.0% / 20.0% (Tier 2/3) in favor of the LP. |
GP Clawback. Upon dissolution, the GP shall return any excess Carried Interest received (computed on an after-tax basis) such that LPs collectively receive the result they would have received under a whole-fund waterfall. Clawback is supported by GP personal guarantee or escrow as required by the LP Advisory Committee.
| Step | Calculation | Amount |
|---|---|---|
| Realization | 1.56× gross MOIC | $1,562,500 |
| Return of Capital | First, to LP | ($1,000,000) |
| 8% Preferred Return | $1M × (1.08²) − $1M to LP | ($166,400) |
| Available for Catch-Up | — | $396,100 |
| GP Catch-Up to 20% | 100% to GP until GP has $41,600 | ($41,600) |
| LP's 80% of Residual | 80% × $354,500 | $283,600 |
| GP's 20% of Residual | 20% × $354,500 | $70,900 |
| Total to LP | RoC + Pref + Residual | $1,450,000 |
| Total to GP | Catch-Up + Residual | $112,500 |
An identical $5M Anchor (Tier 1) commitment under the same gross outcome receives approximately $7.31M vs. ~$7.25M under Tier 2/3 economics, reflecting the 17.5% catch-up and 82.5% / 17.5% residual split.
| Fee Type | Rate | Offset Treatment |
|---|---|---|
| Transaction Fees | 1.0% – 2.0% on selected transactions | 100% offset against Management Fee in same quarter; excess credits roll forward |
| Director / Advisory Fees | Any received by GP or Affiliate | 100% offset against Management Fee; reported in next quarterly LP letter |
| Bolivia Operational Fees | Any received by GP or Affiliate from Bolivia counterparties | 100% offset — GP's Bolivia economics limited to Carried Interest only |
| Organizational Expenses | Cap of $250,000 | Amortized over 60 months; excess borne by the GP |
| Vertical | Allocation | $ Deployed | Notes |
|---|---|---|---|
| Cultural Assets | 35% | $2,625,000 | 5 – 9 positions; avg. $525K – $875K |
| Real Assets | 35% | $2,625,000 | 2 – 4 positions; avg. $650K – $1.3M |
| Bolivia / Special Situations | 20% | $1,875,000 | 2 – 4 active trades; avg. $460K – $938K |
| Liquidity Reserve | 10% | $750,000 | Buffer — not deployed |
| Total | 100% | $7,500,000 | 7 – 13 active positions |
| Return Metric | Value | Notes |
|---|---|---|
| Cultural Assets — Gross IRR (mid) | 30% | ~10.5 pts contribution |
| Real Assets — Gross IRR (mid) | 25% | ~8.75 pts contribution |
| Bolivia Mineral — Gross IRR (mid) | 37.5% | ~7.5 pts (strongest IRR per $) |
| Blended Gross IRR | ~28.6% | Before fees and carry impact |
| Less: Mgmt Fee impact | −1.75 pts | Blended 1.75% avg. |
| Less: Carry impact | −5.5 pts | 20% above 8% hurdle |
| Estimated Net Portfolio IRR | ~21 – 22% | Within 18 – 25% target band |
| Scenario | Hold | Spot Movement | Gross Return (annualized) | Approx Net to LP |
|---|---|---|---|---|
| Worst case | 150 days | Flat | ~−7% (loss) | ~−7% |
| Bear | 150 days | +5% | ~20% | ~14% |
| Base | 90 days | +10% | ~38% | ~30 – 32% |
| Bull | 75 days | +12% | 55%+ | ~44% |
| Blended Gross IRR | Path | Estimated Net Portfolio IRR |
|---|---|---|
| 15% | Stress — multiple verticals underperform | ~−13.2% (after fees + carry erosion + opex drag) |
| 22% | Bear — Bolivia compresses, Cultural late | ~12 – 14% |
| 28.6% | Base case — current model | 21 – 22% |
| 35% | Bull — Cultural exits early, Bolivia at base | ~26 – 27% |
| 45% | Bolivia-driven outperformance | ~29% net |
| Year-1 AUM | Mgmt Fee Run-Rate | Coverage of Operating Burn | Implication |
|---|---|---|---|
| $5.0M | ~$87K | Founder bridge funds gap | Lean operating posture; prioritize Bolivia cash cycles |
| $7.5M (base) | ~$125K | Substantial coverage | Accelerated counterparty rollout |
| $10.0M | ~$175K | Full coverage of base burn | Pull forward Year-2 hires |
| $15.0M | ~$270K | Surplus to support second close | Bring in additional voting IC member |
All figures illustrative. Sensitivities are computed off the base-case assumptions in the Financial Model and Comprehensive Business Plan; actual outcomes will depend on deployment pace, hold periods, commodity prices, and realized exit values.
| Item | Mechanic |
|---|---|
| Distribution Timing | Distributable Cash distributed to LPs within 30 days of realization per LPA §6.2. |
| Annual K-1 | Delivered to each LP no later than March 31 of each year. |
| Holding-Period Treatment (§1061) | Bolivia trades typically run 3 – 9 months and may produce short-term capital gains or ordinary income; the 3-year holding requirement under §1061 does not relieve carried-interest treatment for short-cycle trades. |
| UBTI / ECI / FIRPTA | The Partnership uses customary blocker / structuring techniques as needed; LP-level reps required in the Investor Questionnaire. |
| FATCA / CRS | The Partnership reports under FATCA and CRS as applicable; LPs provide W-9 / W-8 series and CRS classifications at subscription. |
| State Filings | Possible state-level filings in NY / DE / FL depending on LP residence and Fund activity; addressed via the Power of Attorney granted in the Subscription Agreement. |
Each quarterly LP letter discloses, by line item, the fees actually paid, the offsets actually applied, and the resulting net economics — and the annual audit reconciles fees actually paid against fees that would have been paid absent the offset mechanic.
| Reported Each Quarter | Detail |
|---|---|
| Management Fee paid by tier | Tier 1 / Tier 2 / Tier 3 fee paid, gross and net of offset. |
| Transaction fees received | Origin, counterparty, and amount of each transaction fee — and the offset applied. |
| Operating expenses by category | Legal, audit, fund admin, KYC, technology, insurance, travel, broken-deal. |
| Broken-deal expenses | Itemized with prior-period and YTD totals. |
| Cumulative carry distributed | By tier, with associated MOIC and IRR. |
| Estimated clawback exposure | Mark-to-market view, recomputed quarterly. |
The PCAOB-registered auditor performs an annual fee reconciliation alongside the audit, and any variance is disclosed in the audited financials and the next quarterly LP letter.
| Item | Amount / Detail |
|---|---|
| Pre-first-close cash burn | $335K – $670K (legal, CCO, vendor onboarding, Bolivia counsel, AML build-out) |
| Coverage | Anchor Mgmt Fee on first close + founder bridge ($500K – $750K available) |
| Year 1 base-case utilization | ~$80K founder bridge drawn |
| Operating breakeven | Month 18 – 24, at AUM ~$8.5M |
| GP commitment to the Fund | Per LPA Schedule A; aligns GP carry exposure with LP capital |
The pre-launch period is funded by the GP, not the Fund — Subscribers do not bear the cost of building the platform.
| Line Item | Y1 — $7.5M AUM | Y2 — $15M AUM | Y3 — $30M AUM |
|---|---|---|---|
| Management Fees | $125,000 | $270,000 | $505,000 |
| Transaction Fees (selected) | $30,000 | $80,000 | $175,000 |
| Carried Interest (above 8% hurdle) | $295,000 | $650,000 | $1,420,000 |
Mgmt Fee blended ~1.75% and grows with AUM. Transaction fees are applied selectively and 100% offset against Management Fee. Carried Interest lags deployment; Bolivia is the fastest realizer.