Loyal makes it easy to invest in VC. It operates similar to a mutual fund, being evergreen, with a quarterly price, and the chance to buy or sell quarterly, with limits (gates). It is widely diversified by country, sector and stage, almost like a venture ETF. And it has a $50K minimum.

For comparison most VC funds are illiquid closed-end funds, where you cannot access your money for 10-15+ years. They have capital calls, where you must give them cash on demand in later years or face strong penalties, they are highly concentrated on a specific sector, stage and countries, with under 20 investments, and have a $250K minimum.

The professionals do. One reason is that early stage VC is generally uncorrelated with the stock market, making a portfolio with VC and stocks less risky. A second is that it increases returns: historically VC returns are a couple of percentage points better than stocks. Endowments allocate 12% of their money to VC on average (according to NACUBO).

The VC market has dropped by over 30% from its peak in 2022 to early 2025. If you are a value investor who likes to buy low, 2025 may be a great time to invest. If you are a momentum investor who likes to buy what is growing quickly, you may want to wait.

Loyal's best years were 2020 and 2021 when it returned +35% annually, and the worst year was 2024 when it returned -18%. Since launch in 2018 to mid 2025, net all fees (including an allocation for future carry) the fund has a 7% annual ROI, despite losses in the past two years, along with the market. If Loyal continues to follow the market, and the VC market returns to average historical trends, one would significantly higher returns.

Loyal is evergreen, where people can ask to redeem each quarter. This makes the quarterly price real, hence an ROI. Loyal also synthetically breaks down the fund to sub-funds to report TVPI and DPI by vintage so its results can be compared to other funds.

Loyal is diversified across sectors and 70+ countries to allow people broad exposure to the venture market in one fund. As an evergreen fund, operating since 2018, Loyal is naturally diversified across venture stages. Successful pre-seed investments made in 2018 are now growth stage. When you buy into an evergreen fund, you buy your share of all of the assets of the fund at their current market price, as well as a share in all the future investments the fund will make while you own it, just like when you buy a stock.

To properly reduce risk, a venture portfolio should have 500+ underlying portfolio companies. If you have not already invested in 30+ funds, you are likely under-diversified.. (Loyal also gives you exposure to 70+ countries, and sector and entrepreneur diversity that can cover gaps in large portfolios.)

On average smaller (<$250M) VC funds outperform larger ones (>$250M). Top performing funds are typically smaller, many from new managers. There are mixed views.

Loyal has a different fund structure -  evergreen, semi-liquid and diversified - and it invests differently,  sourcing by referrals only, using a 'try before you buy' investing  process, supplementing its team with a network of 1,000+ advisors. Being evergreen pricingis also done differently.

Loyal uses a 'try before you buy' investing process. It has written 400+ small first cheques. The fund then supports entrepreneurs and waits until success seems more obvious (being evergreenthe fund can wait), before investing more in the very best companies. Loyal wins access to these best deals by treating entrepreneurs well, to earn their loyalty.

Whenever there is an exit from a portfolio company Loyal does a distribution of the proceeds to all unitholders at the end of the quarter. You can take the funds, or reinvest them as you prefer. Loyal has already made distributions of around 8% to LPs, including a 1% distribution made in Q2 of 2025. Statistically, one should expect a handful of exits per year from a portfolio of this size, growing from the 0-5% to 10-15% range over time.

The market value of the fund (AUM) is around $30M.

Loyal's first stage investments are only $10K, so 400 investments require $4M. The second stage is $200K, of which 100 have been made, requiring $20M. The third stage is $1M, with larger stages planned to follow as funds are raised.

Now that Loyal's early investments have matured, the fund can deploy $30-50M/year into pre-vetted opportunities. You can start with an initial $3-5M allocation, and then follow a  capital call-like structure, adjusting as you wish.

The minimum investment is US$50K, or $25K for people within the community and affiliated networks or people invited into the fund through the community.

Ask Loyal for an invitation to Formidium, the outsourced fund administrator. You will be asked to sign an online subscription agreement, provide information about yourself, and transfer the funds.

The fund's goal is to invest early and earn the loyalty of top entrepreneurs through support, to win priority access to later follow-on rounds when companies succeed.

Loyal only takes deals referred from three networks: (i) alumni of INSEAD: the top non-US MBA (FT), and top non-US unicorn founder source (Pitchbook); (ii) graduates of Founder Institute, the world’s largest pre-seed accelerator; (iii) ‘golden key’ companies selected by LPs from among their personal deal portfolios.

Loyal believes you minimize negative selection bias, from having inside access, which Loyal has in these two global networks, both defacto, and with signed partnerships. It is also easier to dominate two networks and win the best deals then trying to establish a global brand.

Loyal’s goal is to consistently deliver excess returns to investors, which can be done through good capital allocation, whether or not you are in the best deals in the world. If Loyal was willing to ignore the data and pretend that venture returns were about perfect prediction of the future rather than luck (see 'Venture Math') they would worry.

Loyal's target is to roughly match global GDP, outside of China, Russia and Iran. As of June 2025 the mix is 34% Europe, 30% North America, 19% Asia, 4% Middle East, 5% Sub-Saharan Africa, 5% Latin America and 3% Oceania.

Loyal invests across sectors, with AI, healthcare, cleantech and food all being important sectors, among others. Loyal minimizes predicting the future, including predicting industries, but instead reacts quickly to what succeeds.

Roughly 80% of Loyal’s portfolio is tech, and 80% address UN SDGs. The goal is to invest in the best companies in the networks, so Loyal does not specialize. Many of the entrepreneurs in the networks have a social motivation, so the same is true of Loyal’s portfolio.

Roughly half of the portfolio comes from the Founder Institute, a program which is open to everyone, and attracts entrepreneurs from a wide variety of economic backgrounds. Once a company is in the portfolio, it does not matter where they came from: follow-on funding happens based on merit. It is roughly equally split between INSEAD and FI.

Yes. Unicorns from these networks include BlaBlaCar, Ecovadis, Ixigo, MongoDB, Nubank, Udemy and Wise. INSEAD is top non-US school for unicorn founders per Pitchbook.

Loyal uses a 'try before you buy' or 'gate-stage' investing process. Sourced companies are paid $1,000/month for ten months, if they send data and hold a call with Loyal that month. Loyal's investment committee meets monthly to rank all companies, with the top 0-2% being offered follow-on funding. The subsequent stages are $200K, $1M and $3M.

Most entrepreneurs value Loyal's 1,000+ advisor network. Most have heard good word of mouth in the networks, often from entrepreneurs Loyal they know. There are a subset to whom $10K is a very meaningful amount of money, and for the rest the first follow-on $200K is often meaningful. For more on the entrepreneur’s view, see here.

INSEAD founders are pre-screened by the school. Loyal then does an entrepreneurship aptitude assessment, reviews their business progress, and has calls with two references. FI companies are referred in by local leaders who ran the 14 week program, want support for their companies, and know Loyal judges their program quality by their referrals.

Loyal generally funds around 3% of FI grads in any one year, and on the order of 10% of INSEAD alumni startups. These companies get only $10K to start: they must rank in the top 2% of Loyal's portfolio in any month to get any follow-on funding.

Most VCs are highly selective with their first cheques, then are supportive to companies with the 50% of their money reserved for follow-on. Loyal is more supportive with their first cheques, then are highly selective with the 95% of money reserved for follow-on.

Loyal believes you can evaluate a company better from the inside, working with them over months to years, than you can from outside in weeks to months. Loyal's process is designed to optimize returns from follow-on investing, rather than from first cheques.

Loyal will lead, follow and even be the only investor in the round. When Loyal ranks its portfolio, it is attempting to gauge which company will give the highest ROI on the cheque, without added conditions.

Yes, when Loyal sets terms they prefer common shares, so long as they get a better price for common than preferred or debt. Loyal prefers to own more of its very best companies, rather than get a bigger piece of companies that fail. A cleaner capital table also makes it more likely that the company will survive through financial challenges.

Loyal is conscious that humans are prone to biases in decision making. When a company is 'yours' you like it better (endowment effect) will often look for evidence you chose well (confirmation bias), and can be prone to overconfidence. Good founders will create excitement around a deal (bandwagon effect). You don't want to see companies you already invested in fail (sunk cost bias). By limiting investments to the top 2% in a month Loyal is forced to choose 'their favorite child' rather than supporting everyone.

Loyal wins first cheques through focusing on a couple of networks, treating entrepreneurs well in those networks, and benefiting from the positive word of mouth. Loyal wins follow-on deals by earning entrepreneur loyalty through treating them well and adding value, by learning of company progress quicker through monthly calls, and by making offers faster because deals are pre-diligenced. To date, Loyal has won >95% of its follow-on deals.

Yes. Loyal prepares a monthly list of portfolio companies that are raising, that is available to LPs on request. GPs also make themselves available to LPs for diligence calls.

Loyal invests considerable resources in supporting and developing each company, and it wouldn’t be fair to other LPs to allow one LP to ‘swoop in and steal the deal’. Given that Loyal only invests fixed amounts at each stage, and that in roughly 80% of cases to date the company is open to taking in more than Loyal’s fixed amount, in reality this is a modest constraint.

No. Top performing Loyal companies often find it very easy to fill their round between Loyal and their existing investor leads. Loyal should in any case be loyal to their LPs and give them priority on referrals of top deals. Loyal could circulate a ‘tier two’ mailing list of companies to non-LPs, and feels that is not a service that people would want.

Yes, there are two conditions. First, LP money cannot displace Loyal’s money: Loyal’s allocation must be filled before the LP’s. Second, if an LP invests more money into any one deal than they have invested into Loyal, they must pay Loyal a co-investment fee.

No. Loyal does not have sufficient demand for such SPVs. As of now, you would deal with and invest directly into the company. Loyal intends to offer such vehicles in the future.

Your money isn’t displacing Loyal’s in that case. You would still pay a co-investment fee if you invested more in the deal than you had invested in Loyal.

Loyal believes it is unfair to other LPs for you to make minimal contribution to early support costs, and then free-ride with direct large investments. The co-investment fee is 2.5% of the amount by which each co-investment exceeds your cash invested in Loyal. You can eliminate this fee by simply topping up your investment in Loyal.

Yes. Loyal hopes no LP will abuse this right, requiring a re-examination of the policy.

While not officially marketed as an impact fund, Loyal has significant impact in two ways. Loyal portfolio companies have impact, and the Loyal funding process builds gender equity and financial inclusion through who and how it funds.

Around half of Loyal's portfolio is sourced from the Founder Institute, which is open to people from all walks of life. Around 20% of the Founder Institute companies funded by Loyal, often those from emerging markets, find the initial $1,000 per month to be 'life-changing' capital which can help their business stay alive until its sales build. To better understand this topic, see this op-ed authored by Loyal in a major daily.

As outlined in this HBR article Loyal co-authored, Loyal’s process results in 30% women CEOs being funded, as opposed to the 3% industry average. Specifically, Loyal gets these outcomes by eliminating pitches, and funding based on business progress and outcomes.

Loyal believes that funding entrepreneurs who perform, and are irrationally overlooked by other investors, will result in higher investment returns than being biased by gender and wealth. Note that Loyal's performance to date is above the VC average.

Loyal currently has more opportunities than capital. To expand, besides capital, Loyal needs partner organizations who create entrepreneurs with a high likelihood of success, who lack only funding. Such groups must provide strong entrepreneur training and an ‘alumni’ network.

Over 80% of Loyal’s portfolio address UN Sustainable Development Goals, around 20% address climate change, and around 30% are in developing countries. And rather than talking about whether a company is 'an impact company' or not, Loyal prefers to measure/estimate the actual environmental and social ROI of its portfolio as a whole.

Rather than forecasting possible future impact, Loyal calculates (using estimations as needed) the actual environmental and social ROI of the portfolio today. This means that companies with environmental or medical innovations that do not have significant customers yet have no impact. In the 2024, based on data from 22 companies covering 36% of the AUM, environmental ROI was +8% and social ROI was +50% (contact usto request the annual report).

Loyal will consider an impact-only fund if and when such a fund has strong backing from two lead investors willing to commit $5-10M each to such a fund. Please contact us if this may describe you, and to ask about/help influence Loyal’s Global Impact Fund.

The few sources Loyal has seen say that VC typically returns 10-14% over the long term, i.e., a 10 year cycle, or typically about 2% above the stock market. We would welcome added data to refine this number.

This is unclear. VC insiders disagree strongly on this point, when speaking off the record. The best paper found to date states that “VC firms do not persist in their ability to choose the right places and times to invest”. It seems that “initial success improves access to deal flow”. This factor “attenuates over time” and in the long term “performance converges” across firms. Research in non-VC funds came to similar conclusions on fund manager persistence.

Here is one public data set, a study of 21,000 financings in the US over a 10 year period.

Overall, 65% of VC deals fail, 31% (Column 2 plus 3) return a median of around 3x the invested capital, and 4% are ‘home runs’ that return over 10x the initial investment.

The industry does a pretty bad job at this. As you can see, 96% of all investments made by VCs are not home runs. Note these are the results from VCs who got funded, typically due to a track record of success. The infamous Bessemer Ventures anti-portfolio shows how one top brand VC passed on Apple, Facebook, Google, Tesla and more. Maybe home runs aren’t predictable to start with.

A recent Kauffman Fellows publication using AngelList data concluded “at the seed stage … indexing [investing in 'all plausible deals'] beats 90-95% of investors picking deals”.

As Loyal’s paper in Institutional Investor magazine outlines, the high dispersion happens because VC funds are not diversified. If you do a Monte Carlo simulation taking the deal by deal returns shown earlier, you can with a few assumptions (ask) get a good match to the real fund returns (compare column 1 and 2). If you then increase the size of the fund to 150 investments you get the results shown in column 3. If diversified enough, VC funds give low volatility returns. If you believe the Cambridge Associates data set is accurate, the results also consistently outperform public markets returns in the long term.

(Compare the third bar above to those to its left.) If home runs happen only in 1 of every 25 deals, only half of funds with 10-15 investments will have any home runs. The median fund with 150 random venture quality investments is statistically ‘guaranteed’ to include multiple home runs, likely including one >20x..

A diversified VC fund is statistically virtually certain to deliver (still above average) second quartile returns. Traditional VC investors are looking for ‘top quartile managers’. To have a chance to be top quartile you must have an undiversified fund. It is also more work to run a fund with many portfolio companies. For details, see Loyal’s Institutional Investor article.

Loyal believes that you should start with a diversified portfolio, and can then deliver excess returns in follow-on investment, due an information and relationship advantage built with entrepreneurs over time (so long as you run a strict, competitive gate-stage process). This results in a portfolio where half is diversified, and half is concentrated in the top 15 companies, i.e., the top 4%.

The evergreen structure has become common for private equity funds in the past few years. It is just starting to spread to VC. The Stepstone SPRING VC fund-of-funds, is evergreen, quarterly semi liquid, diversified across 1,000+ assets, with a $50K minimum. As a fund of funds that takes carry yearly, it has roughly double the fees and carry of Loyal, and 90% of its assets are in North America vs. 30% for Loyal. AlphaQ in Germany also offers an evergreen VC fund-of-funds. Sequoia offers an evergreen VC fund since October 2021 with limited market success. One market observer estimated that around 1% of all VC funds are evergreen. Many of those have a closely held LP base.  

Some funds like ADV out of the UK, are structured as corporations. Loyal prefers the tax advantages the LP structure offers investors. Others include Draper Esprit, and the liquid venture capital trusts, all on the London Stock Exchange. Many investors have been unhappy with their performance. There are challenges to the public buying a fund where the data on the performance of the underlying companies is private and confidential.

If the fund were tokenized, besides the problems faced by the tradable VC funds, portfolio insiders taking advantage of less informed LPs could be an added concern. Note that Sequoia also chose not to tokenize when moving to open ended.

This is common, and is called 'scout investing' since it is typically done by 'scouts' associated with a VC fund rather than the main fund. Sequoia has used scout investing since 2009. More recent converts include General Catalyst and many others. Holtzbrinck Ventures, a European family office fund, also had success through reserving >80% of their capital for follow-on investment ‘over several rounds’.

Yes. Loyal believes one good way to test the degree to which a VC fund is data driven is to look at diversity in outcomes. In the VC industry around 3% of funding goes to companies with a woman CEO, which is hard to rationalize. Social Capital’s ‘Capital-as-a-Service’ funded 42% women CEOs, with Clearbanc similar, as is Loyal with 31% women CEOs.

This is an emerging trend, first popularized by 500 Startups (launched in 2010), Right Side Capital (launched in 2011), AngelList Access Fund (2020) and Pioneer Fund (2020), as well as YCombinator and others. Critics argue that diversification or ‘spray and pray’ moderates returns. People who look closely at VC data, such as the Heads of Insights at Carta and Equidam, argue that diversification gives higher median returns.

Advisor networks, though perhaps of smaller size, are common in accelerators like YCombinator, or a few funds like Pioneer Fund. Loyal's carry sharing is modeled on Founder Institute. Andreesen Horowitz has hired ~100 employees to support companies.

Loyal is similar in using INSEAD for fundraising and to set up a top quality network to support deals. Loyal sources and leads deals, generating more loyalty, while AVG follows.

Loyal simply combines the many elements listed above into one fund. Loyal’s process is perhaps more systematized. Having GPs engage early is perhaps unique. And Loyal simply optimizes everything they do to enable all of the above. These features are in the fund’s DNA.

The Loyal team has around 22 people which works out to 10 full-time equivalents. They are supported by 1,000+ advisors. There are five full-time employees: Kamal, Michael, a head of operations and two others. Two people work part time in finance and operations, the others are venture partners working with Loyal 1-2 days/week.

Both are experienced entrepreneurs, and worked together in a startup. Both are experienced and successful angels. Kamal has designed and run accelerator programs part time. Michael has mentored for multiple accelerators. Prior to this Michael worked for CIBC, a big Canadian bank, and Kamal was a consultant at Bain & Co.

Kamal has a realised 4.6x over his nine angel investments, and Michael has an unrealised >5x over his eighteen angel investments. Are they skillful, lucky or both? You decide.

Kamal and Michael, as entrepreneurs, are used to paying themselves less to start and more later; venture partners have agreed to the same; advisors are paid in carry. The fund has life insurance on Kamal and Michael, which can pay a replacement manager if needed.

To date the partners have invested >1% of the cash in, in addition to covering their living expenses while being paid well below market salaries. The fee structure is strongly success-based and deferred providing an additional strong alignment of interests.

Loyal uses the same scalable ‘try before you buy’ process for the team that it does for investing. People start as advisors. A fraction are tested out for 3-4 months as VPs, with around half becoming 1-2 day/week VPs. As of July 2025 Loyal has 13 VPs.

One advisor is a top ICU surgeon in Washington. Another is founding partner of a >$100M VC fund in Paris. A third is a sales lead for Microsoft. Others are experts in digital marketing, AI, team building, sales in Latin America, drug pricing, deep learning, retail strategy, algorithmic trading, insurance brokerages, and so on. Access to their profiles is available on request.

Give them an unbeatable offer (see here). Give them stimulating work: the chance to help mentor interesting innovators. Give them control over the work: they opt in to every engagement. And make the initial ask small: a single phone call, giving them the freedom to do more or not from there as they wish. Then share 20% of the fund’s carry.

Loyal has around 240 investors. These include a number of very sophisticated individuals, including current or former managing director level people from General Atlantic, KKR, McKinsey, UBS, the CEO of a Fortune 500 company, the COO of a $100B asset manager, a portfolio manager of a $7B alternative asset manager, the executive chair of a $500M VC firm, as well as GPs of five other VC funds and multiple professors of VC and business school deans. Investors also include family offices in Canada, the US and Switzerland. Over half of the investors are from the INSEAD community.

Loyal is happy to work with institutional investors. To date none have subscribed because of the career risk of working with such an innovative fund, with the evergreen fund structure being of particular concern. Loyal's diversification is also seen as less of a benefit for groups that already have tens of VC funds in their portfolio.

While over half the investors are from the INSEAD community, including a number of faculty, Loyal is independent of, and partnered with, INSEAD. There are many links between Loyal and INSEAD, including sourcing, advisors, investors and support for students. The affinity makes it easier for INSEAD investors to learn of and diligence Loyal.

Yes. All investors must be qualify under their local country's laws as accredited, qualified or sophisticated investors. This is generally a wealth test: for instance in the US it means an income of $200K annually, or wealth of $1M excluding your home. Loyal's fund administrator also does anti money laundering checks on all investors.

Yes. Loyal gives LPs ‘golden keys’ to select companies, countries, or themes for an automatic pilot investment by the fund, at the rate of two companies per million dollars invested, or one for the first $100K. All follow-on investments are earned on their merits.

Both. Loyal's portfolio includes entrepreneurs aged from their 20s to their 80s, with the majority being in their 30s to 50s. Some are in their first startup, others have multiple exits.

Loyal has an extraordinarily good reputation in its network, earned through treating the entrepreneurs well, and a high quality advisor network. One of Loyal's entrepreneurs is Roger Egan III, who built and exited Singapore's first online grocer, Redmart. Although fully funded by himself and his prior VCs, he approached Loyal to join his next venture.

Entrepreneurs believe Loyal is highly differentiated in the VC space, saying things like:

• 'Loyal is the real deal: real help, very accessible'
• 'you guys are doing cool stuff and you certainly stand out from the crowd'
• 'I would never take money from a VC, and you don't count, you are not a VC'
• 'you have the best perks I have ever seen, Loyal rocks'

Loyal believes this primarily comes down to treating entrepreneurs like customers, the quality of its 'incredible' network of advisors and the quality of its VPs who are chosen from the best advisors. Loyal's flexibility around leading or following, openness to taking common shares, and willingness to fund without a pitch deck also help.

Complaints generally center around the fact that Loyal's follow-on funding is competitive, and hence opaque and unpredictable, rather than supportive as with other VCs.

To date, no. Loyal has a 98% close rate on its 100+ follow-on offers made to date, including those in competitive situations where others were excluded. Loyal’s relationship, speed and proven value all seem to help (see this Kauffman study that validates these factors matter more than brand name).

Loyal believes that the ability to succeed as an entrepreneur is not linked to gender and race. If so, VCs who do not have diverse portfolios are probably not selecting the best entrepreneurs. In Loyal's case, 31% of the portfolio have a woman CEO (10x the industry average) which the firm believes is primarily due to doing reference calls instead of listening to pitches, as explained in this HBR article. Loyal entrepreneurs are also diverse by race, country and economic background.

The core fund is an evergreen Ontario (Canada) limited partnership. Limited partnerships allow investors to avoid double taxation, and deduct certain expenses and losses. Canada generally does not tax non-resident limited partners.

You subscribe by signing forms online on the fund administrator Formidium's website, or for Canadian investors, by speaking with our exempt market dealer, Axcess Capital. In both cases you will also need to provide identity information.

The signing package they will share with you is made up of:

• summary of terms (7 pages): summarizes key elements in the below
• subscription agreement (19 pg + 30 pg appendices): the terms both sides agree to
• risk factors (17 pages): so you know and acknowledge the risks in the investment
• tax disclosure (6 pages): tax items to note: does not replace your own tax advisor
• limited partnership agreement or LPA (78 pages): the rules that govern the partnership

The 7 page summary of terms and 19 page core agreement are as good as Loyal could do, and are recommended to be read in that order.

Having your ID and address certified is a requirement of the fund administrator. Loyal has an online provider ShuftiPro, where you can certify online in minutes, if you do not have easy access to certified papers. Email operations@loyal.vc for help in this case.

The lead lawyer for the fund is Brooke Jamison, a partner and national expert in VC funds at Davies, one of Canada’s top law firms. Day-to-day fund and commercial work is done by Tom Caldwell, in sole practice, given his more favorable experience-to-price ratio. The fund's US lawyer is Rich Gora.

Loyal does not consider this to be likely. It is also standard in VC agreements to have this clause as insurance against an eventual wind down.

To date, all investors in the same closing and unit class have had the same terms. There were special terms offered in 2018-2019, and a special unit class offered in 2018-2021.

The likelihood is low, because it would be arduous for the managers of the fund. The fund currently qualifies for a 3.c.1 exemption, with well less than 100 US investors.

Loyal VC does not expect to make significant use of Special Allocations. Loyal does offer a ‘Shariah-compliant’ or ‘Class S’ unit. To date <1% of the AUM falls into this category..

The Manager has the option to waive this clause, as outlined in Clause 4.1.c. Given the fee structure, the Manager would have a financial motivation to grant the waiver. Note that investors who have held their units less than two years are a lower priority to fill during periods when redemptions are gated.

This clause allows LPs access to any parallel funds set up by Loyal without penalty fees.

In the event of something happening to an LP, most likely the estate would simply either transfer units under Clause 4.7 or ask to redeem the units for cash, as outlined in Clause 4.1.

No. It is in the manager’s interest to keep expenses low, because they impact fund returns, and potentially the manager’s ability to raise more money. It is similarly in the interest of LPs to intelligently manage, e.g., audit costs. It was felt these incentives were sufficient. Note that annual expenses over the past four years have varied between 0.5 - 0.8% with audit costs being the largest component of the expenses.

The primary class of units that Loyal offers for sale today are Class I units, that have a 2.0% annual management fee and 20% carry. Loyal also offers shariah-compliant Class S units (see here) that have a 2.5% annual fee and 20% carry.

Older class A units are not available to new LPs. They had a 0% annual fee and 20% carry, and instead had fees of 5% of funds invested and 5% of funds paid out or redeemed.

Loyal’s MER for Class I units was 2.74% in 2024, 2.57% in 2023 and 2.74% in 2022.

The carry is taken based on funds actually returned to the investors either in distributions or in redemptions, from the specific units in question (class and series). Until you have received back your initial invested capital in cash from the specific units, no carry is taken. Note that if you choose to reinvest this cash in new units, it still counts as received.

Note also that although the limited partnership agreement says the carry will be 25%, this is reduced to 20% in the summary of terms for the current units.

No. Hurdle rates are controversial in venture capital, with many in the industry believing that they distort incentives and change behaviour negatively. Loyal believes that the fact that the carry is deferred until the investor receives cash makes up for the lack of hurdle.

Yes. There are early redemption fees of 5-10% for investors who redeem within two to four years, and 15% for investors who redeem within two years. This penalty fee is not payable on distributions, only on redemptions.

The fees cover most of the manager's costs, due to careful expense management including in lower salaries which are compensated for by equity grants. The manager has sold some of the equity in the manager to selected LPs for cash, to cover the shortfall.

Yes. Loyal’s accounting firm prepares your tax information slips, after compiling the year end accounts. The accountants tend to issue these in late March.

Loyal issues pro-forma K-1s to US investors, for your information and tax accountant's convenience. These forms are not filed with the IRS.

[Answer to prior Q: Yes. Loyal’s accounting firm prepares your tax information slips, after compiling the year end accounts. The accountants tend to issue these in late March.]

Loyal does not invest in LLCs, only in C corporations, hence does not generate UBIT. Note that fund-of-funds holdings (1% of the portfolio) are in LLCs. The manager withholds US taxes to eliminate filing requirements for Loyal and its LPs.

According to the best information Loyal has, foreign private equity (and venture) capital fund assets do not need to be listed on an FBAR.

No. Loyal offers investors global diversification. This means Loyal does not qualify for government schemes that encourage investing in a specific country or region.

Loyal is a Canadian fund, so generally, no, non-US investors will not need to file taxes in the US. As of 2025, around 20% of the assets of the fund are in the US. While most returns are likely to be untaxed capital gains, US withholding taxes may be taken on dividends (if any) paid by US companies. Loyal asks you to fill out a W-8 BEN or similar form to minimize the amount withheld, and if so, there would be no added benefit to filing US taxes.

Generally, no. Loyal is a Canadian limited partnership, which is a flow-through entity, and Canada taxes based on residence, so non-residents will not be taxed. Loyal also does not invest in real estate, mining or other 'Part XIII' assets which attract withholding taxes.

The limited partnership structure is used precisely to protect investors. So long as you do not get actively involved in managing the fund, you are a ‘limited’ partner with no responsibility for actions of the partnership. You get similar protections as if you were a shareholder, e.g., of IBM.

Loyal sets up a synthetic ‘fund within a fund’ where asset ownership is allocated such that Class S holders have a zero allocation of non-compliant assets, and a slightly larger share of compliant assets to compensate.

Some of Loyal’s existing LPs requested a Shariah complaint unit class, so Loyal obliged.

The assets in Class S are currently too low to justify the administration cost of a full fund. If Class S assets exceed $5-10M, then running two parallel funds would be economic.

Loyal’s Sharia compliance advisors, Amanah Advisors, make this decision.

Loyal’s fund operations are also reviewed by the advisor. Core operations are compliant. Excess cash is sometimes invested in interest bearing assets. Loyal manages cash such that Shariah-investing linked cash is not held in these assets.

As outlined in Loyal’s Shariah compliance policy, the advisor looks for company compliance in three areas: business model, sources of income and capital structure. The advisor also looks at the type of financial instruments that Loyal holds in the company.

There are costs for the Shariah advisor/audit. To ensure other LPs do not pay, Loyal pays this cost from the management company, and increases Class S fees. Today Loyal is subsidizing Class S investors, because there are very few. Loyal hopes this will change.

The management fee is 2.5% annually, and the carry is 20%, as outlined in the fees section.

No. As mentioned earlier, Loyal prefers to invest in common shares. Loyal believes equal risk sharing with the entrepreneurs is not just Shariah-compliant, it is both more moral and ultimately more profitable. By giving up protections Loyal gets better prices, hence better returns from the winners, and with less debt companies are more likely to succeed. Common share investing is unusual in VC in most countries, though is common in, e.g., the UK, due to tax incentives.

No. Loyal is open to working with lead investors to develop alternate fund structures to better suit their needs if the investor is willing to support Loyal with building an appropriate LP base who will appreciate the offering

Yes. One simple way to structure this fund, and benefit from the existing Loyal strategy, would be to build a closed-end feeder fund that would invest in the evergreen fund. This fund could do equal quarterly draw-downs over years 0-3 and regular quarterly distributions over years 7-9, backed by scheduled unit redemptions. Anchor LPs providing on the order of $5-10M would be required to justify launching this fund.

Loyal can take advantage of its semi-liquid nature to offer investors a fixed annual amount of 8-10%, either through a fund, or as a service to an individual investor. The fund would reserve 8-10% in cash, to ensure steady payments, and then each quarter redeem the difference between the fund's quarterly distribution and the desired quarterly payment. Extra amounts could be reinvested into the fund (or paid back to the investor if this is a donation to charity). In years with lower returns you would dip into the capital.

Note that while on average the fund's returns should exceed 8-10%, there is no guarantee that the capital will last forever. As such it may be better for, e.g., a donation to charity where you wish a fixed annual payment, rather than for a multi-decade personal retirement annuity.

Yes, Loyal can easily manage a themed fund, especially an impact or regional fund that invests in the best opportunities from the existing portfolio of 400+ companies that fit the theme. Lead LPs would be required to justify the added overhead complexity of this fund.

Loyal is open to discussions around a single country themed fund, with a group that is in a position to either provide all of the capital through its own networks, or pay a suitable fee to the manager for services.

The themed fund concept outlined above is a themed variant on the special opportunities fund. Loyal believes the best strategy is to focus on filling the core fund to capacity first, and then add these satellite funds. Note that any special opportunities fund is likely to be riskier than the core fund, since it will be less diversified.

Yes. Doing so would require changing the size of the stages of investments that Loyal does. A detailed model is available for LPs who wish to have this discussion.

Because the fund is invested in illiquid assets, Loyal offers semi-liquidity. Investors can ask to redeem units each quarter. If requests exceed the fund's ability to fill them all, they are gated (i.e., are filled partially, with priorities applied), to protect the health of the fund.

Loyal prices the portfolio quarterly (the LPA guarantees twice a year). At the time the portfolio is re-priced, investors can choose whether to ask to buy or redeem units at that price. Loyal uses half of all new investor money to buy out, pro rata, those that are leaving.

Half of the money coming in is reserved to buy out sellers. All sell orders are filled pro rata with the following priorities: (1) requests given with two years notice for units held over 10 years, (2) unfilled requests from prior quarters for units held over 2 years, (3) new requests for units held over 2 years, (4) units held less than two years.

You have no guarantee. It may take a year or more to fully fill your request, although it could also be filled in a quarter. Note the manager doesn’t get paid carry until they find a buyer for the units, so they share risk with you and are motivated to find a buyer.

Over the past few years, Loyal has received redemption requests for around 4% of the AUM each year. Around half of those requests were filled in the quarter received. The other half have been gated, typically, and not always, receiving a partial fill in the first quarter, and being fully redeemed in the second quarter.

It would be a Ponzi scheme if the value of the assets were inflated, so look closely at the valuation. If the assets are valued fairly, it is no different than in a public company. Amazon does not liquidate inventory or data centres to cash out investors, instead new investors buy shares from old investors who are now selling.

Yes, in an extreme case. As outlined in the summary of terms and limited partnership agreement, if a redemption request is received with two years notice (and left unfilled) from an investor who has held their units for at least 10 years, the fund must fill the request using all available funds, including by selling assets if necessary.

All of the fund's holdings are valued each quarter and the sum is divided by the number of units to calculate the value per unit. Purchases and redemptions happen at this price

The overriding principle is to value assets at the price Loyal would be willing to pay for them, knowing everything they do about the company. Factors considered in setting the value include both quantifiable metrics, such the value of recent rounds, the specific equity terms, any financing offers, revenue multiples and other operational metrics, as well as softer factors such as loss of team members, potential friction in the team, historical reliability of past promises, and frequency and quality of reporting.

In the simplest cases there may be a recent or upcoming round, in the same class of equity, the round price may look reasonable when compared to the company's revenue multiples, the company may have performed to expectations since the last round, everything is good in the team, and Loyal has detailed recent information. If any of those is not true, judgement comes in. For more details see Loyal’s valuation policy.

Yes. This is normal with buying shares. It is unusual if thought of from a conventional closed-end VC fund mindset. It means, for instance, that new investors may receive the same distribution as investors who bought in three years go. The reason this is fair because the price the new investor buys at reflects the fact the distribution is known.

Loyal is able to back test its valuations by comparing the valuation when a company does a round to the valuation that Loyal gave that same company in the prior quarter. Over the past three years of backtests Loyal has been almost exactly right 29% of the time, undervalued 50% of the time and overvalued 21% of the time. The fund believes that the 2:1 ratio of undervalued to overvalued is a good balance.

KPMG have also audited Loyal's financial statements each year since 2021, with the valuations being the most important part of auditing the fund's assets.

Loyal is an evergreen fund. Any upside from overvaluing in one quarter just causes problems in future quarters, especially with the year-end audit, let alone the long term reputational damage it would do to the fund if found out. Note also that management's primary financial reward is carry, which is paid only when they successfully sell assets and make distributions, or when they fill redemption requests.

Loyal shares detailed up-to-date return figures in their presentations. ROI is the standard figure, and has ranged from +35% annually in 2020 and 2021 to -18% in 2024. Note that this is ROI, for easy comparison to other asset classes, as opposed to IRR which is often inflated when you consider the drag of undeployed capital on returns.

For classic VC investors, Loyal can also create synthetic closed-end funds: the 2018-20 'vintage' fund had a DPI of 0.38 and TVPI of 1.52 as of the end of 2024. Industry insiders who have looked at Loyal's data have told the fund that it has been a consistently above average/second quartile fund across all vintages. This is not surprising (see venture math).

The partnership is structured as an independent entity, with its own bank accounts and an independent fund administrator. It is audited annually by KPMG. Limited partners have an LP Advisory Committee (LPAC), who meet quarterly. LPs can replace the fund manager if 66% of votes agree.

Since 2022 the accountants are KPMG; from 2018-21 the fund used BDO Global. Since 2025 the fund administrator is Formidium, a group who administer more than 1,500 funds. Prior to that the fund used a sole practitioner CPA/CGA supported by in house resources.

According to the fund's Limited Partnership Agreement, every investor holding >7.5% of the units has an automatic seat on the council. The remaining LPs vote yearly to select two additional LPAC representatives. Over the past three years, the third place vote getter has been offered observer status on the LPAC, to ensure it has at least five people. The members for 2025 are Jill Brooks-Garnett, Peter Van Dyke, Dr. Ralf Schlaepfer, Alessio Ascari and Abhishek Irani.

The fund's financials have been audited by KPMG since 2021. Earlier years were not audited since the LPAC deemed the cost of the audit to be too high given the fund size. Besides reviewing the financial statements, the auditor also spends a significant amount of resources reviewing the valuations of a selected subset of the portfolio.

Legal, accounting and operating costs related directly to the partnership are charged. Most other costs are paid by the manager. From 2021-24 the fund’s MER (fees plus expenses) ranged between 2.5% and 2.8% for the Class I units that most new investors purchase.

Loyal sends monthly update emails to LPs, has bi-monthly portfolio showcases where LPs can meet directly with portfolio company CEOs, has quarterly virtual presentations with open Q&A that all LPs can attend, has in person community gatherings when GPs visit your city, and prepares an annual report with audited financial statements..

The fund administrator, Formidium, prepares all transfers and does the accounting. Any spending over $1K requires the approval of both managing partners given in a monthly live video meeting before the transfer is prepared. New bank accounts for vendors and portfolio companies are verified by live video calls before being added. As of mid-2025, since Formidium is still learning Loyal's processes, Loyal continues to use the external controller that did the fund administration in prior years to review transaction paperwork for all payments.