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FREQUENTLY ASKED QUESTIONS

FUND OVERVIEW

Who can invest?
All current Booth students and alumni can invest in CB Capital (hereinafter the “Fund”), except faculty members due to potential conflict of interests.


Due to our unique structure, if you are a resident of California, Massachusetts, New York, Oregon, Washington, Illinois and New Jersey, you can invest even as a unaccredited investor. Non-U.S. citizens do not have any limitations. 
We also have a parallel fund set up for accredited investors who are in states that do not recognize our investment club structure. To join, please complete the subscription form .
You can also refer to our Investor Onboarding Manual and we will be in touch with further details. 

How much can an individual invest?

The minimum investment is $5,000 but our median investment amount that we have seen is $10,000. There is no upper limit on the amount that an individual can invest. 


What is the investment process? 

A five-step process is followed to evaluate all investment opportunities:

  1. Sourcing: Current Booth students selected as CB Capital Fellows source startups that meet the investment criteria. We leverage our collective network of our GPs, fellows, NVC and the broader LP group to source our investments. 

  2. Diligence: CB Capital Venture Team Fellows diligence the deal and build an investment memo that is circulated to LPs. 

  3. Founder pitch: Founders of the proposed investment pitch their startup to CB Capital LPs, who can ask questions to further analyze the opportunity.

  4. Vote: All CB Capital LPs will be required to vote on the investment opportunity through an online form, which will be accessible over a 5-7 day period, along with all relevant documentation relating to the opportunity.

  5. Decision: The investment opportunity is approved if a majority of LPs vote in favor of it. The vote is final, irrespective of the outcome.

 

Who is managing the fund? 

The founders & GPs along with CB Capital Fellows, composed of selected current Booth students (hereinafter “Fellows”), will be managing the fund. They will be supported by an Advisory Committee comprising select Booth professors and alumni with relevant experience and expertise. 

What stages and industries will the fund focus on?

  • We aim to invest in seed-stage startups, with a few select Series A investments/ follow-ons

  • A primary mission of the Fund is to support Booth entrepreneurs who are solving important problems - as such, we will not limit our focus areas down to any industry verticals

FUND STRUCTURE & ADMINISTRATION

What is the fund structure?

The fund structure will deviate from the typical GP/LP structure. CB Capital will be established as Investment Club LLC to let unaccredited student-investors to invest in non-public securities. 

What is the fund cycle?

The fund life cycle is typical to that of VC funds, i.e the fund life is around 10 years with possibility of extension by 2 years.  

Why can’t we structure this as an angel network where each angel has the option to opt-in to an investment that the “fund” recommends?

One of the primary missions here is to let non-accredited student investors start an angel investing journey.  Our unique structure validated by a top law firm enables this.  If any accredited investors want to make separate, additional investments into certain companies we review, we will be more than happy to facilitate, given the availability.  

What are the fees and admin charges?

There will be [0.5-2]% annual admin all-in fee, which will be used to cover all admin, legal, tax, and operational costs.  This is subject to change in line with the total AUM of the Fund.  There will also be 20% carried interest, which will be distributed to the Fellows (0.2-0.5% performance-based) for their valuable contributions and the remaining will be donated to Polsky Center or set up as a scholarship. 

 

Who are the advisors? 

We have a diverse group of alumni entrepreneurs (who have successfully built and exited companies), investors (senior and mid-level investors in VCs), and professors (of finance and entrepreneurship) who will be forming the board of advisors. You can see our complete list of advisors here.

Do you have any external partners who help with fund administration?

Yes - we have multiple partners supporting our operations and providing specialist advice. You can see our complete list of partners here.

How will the Fellows operate and communicate?

  • All CB Capital Fellows will have access to a dedicated Slack workspace for communication

  • There will be weekly meetings for sourcing and due diligence processes

  • Booth students have access to quality research tools, including Pitchbook, CB Insights, Capital IQ, and more

  • There will be Fund Wiki and templates readily available for structured, repeatable work 

  • Select advisors based on their expertise will provide guidance to the due diligence process. 

Please send out a fund model assuming the fund invested in some of the Booth success stories and some failed ventures. How will returns look like in different scenarios?

You can refer to the financial model here. You can make a copy of the model and play around with the inputs. ​

ROLE OF LPs

How will LPs be involved in investing decisions?

  • As CB Capital is structured as an investment club, it is important for all LPs (investors) to participate in investment decisions.

  • As a Limited Partner, you will have access to all due diligence materials, including the investment memo, company deck, and any other relevant information. 

  • Each investor will be given a vote on each investment deal. However, its imperative that investors not miss more than 2 consecutive votes. You can read more about the investment process here.

What happens if an LP misses a vote?

To maintain the investment club structure, any and all Limited Partners who fail to vote consecutively will be vaporized and their stakes will be distributed equally to all other Limited Partners. Please refer to Clause [*] of Term Sheet for further details. 

What if the LP vote is tied 50-50? 

In this unlikely case, we will call for a re-vote - if it remains in the deadlock, we won’t proceed (since we need a majority). 

Will LPs receive any communications and updates about the fund?

  • Before every pitch, the deck, memo, and any relevant materials will be shared with investors.   

  • Quarterly updates will be sent out to investors, and the audit will be conducted on an annual or bi-annual basis based on the cost structure. 

Would the fund allow for accredited investors to invest above the minimum on specific deals?

We would be more than happy to facilitate warm intro to founders for separate, additional investments for accredited investors.

FUND RAISING

How often will CB Capital raise funds? If you raise and close a fund in 2021 then deploy it over (3) years, does that mean future students between now and then would not have access to invest in Booth Capital and must wait for the next fund to be raised?

TBD, depending on the total AUM and the duration of the investment period (will be in between 3-5 years). We may have 18 months between the initial closing (Dec 2021) and final closing - during which we may admit further capital.

Once we are done with our final close, we can't guarantee accepting your investments into the current fund. 

Why is the minimum investment $5,000?

  • In a recently conducted survey of Booth students, we received 251 survey entries, of which the majority of the respondents chose $5,000 as the preferred check size. 

  • Lower minimum check size makes the fundraising process more difficult and creates administrative burdens with higher fees due to the increased number of investors required to meet the target fund size. 

When is the fundraise closing?

We plan to hold our final close by end of May 2022.

CB CAPITAL FELLOWSHIP

How many CB Capital Fellows will be part of the team?

We will be selecting [3-6] Venture Partners (2Y’s) & [3-6] Venture Fellows (1Y’s) to manage investment & operation of the Fund. 

Who is eligible to apply?

All students currently enrolled in the Full-Time, Part-Time and Weekend programs at Chicago Booth can apply.

What is the selection process?

An application form will be circulated during the early fall quarter to incoming 1Ys, and another will go out at the end of winter quarter to select rising 2Ys. Shortlisted candidates will be interviewed by the outgoing Fellows. 

Will the Fellows be compensated?

There will be no cash compensation given to Fellows - however, Fellows and select Advisors will be provided with a certain portion of carried interest in the range of 0.2 to 0.5%.   

In case you still have a question, reach out here.