Fund Structure
Subscription Agreement
The legal contract through which an LP commits capital to a fund and agrees to the fund's terms.
A subscription agreement is the document through which an LP formally commits capital to a venture fund. It includes the LP's capital commitment amount, representations about accredited/qualified status, acknowledgment of fund terms (fees, carry, restrictions), and personal/entity information for KYC/AML compliance. Subscription agreements are binding once accepted by the GP and create the legal obligation for future capital calls.
In Practice
A family office executes a $10M subscription agreement for Fund III, committing to fund capital calls over the 4-year investment period, acknowledging 2% management fee and 20% carried interest.
Why It Matters
The subscription agreement creates a legally binding capital commitment. LPs must understand that signing commits them to fund capital calls for years, with limited ability to exit the obligation.
Related Concepts
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