Advisor Upside FAQ
Q: What are Dollars at Work?
“Dollars at Work” represent a portion of the management team’s carried interest that is being allocated to an individual on the basis of his or her contribution to our team. If you receive $50,000 at work in a specific company, then every time the value of our investment in that company grows by 1x (assuming the fund has distributed 2x committed capital to investors), you earn $50,000.
Here are some examples to illustrate the point:
Case 1: You get $50,000 at work in an investment that exits with a multiple of 1.2x. You earn (0.2 x $50,000) or $10,000 (assuming the entire fund has distributed 1.2x committed capital to investors).
Case 2: You receive $50,000 at work in a company that exits with a multiple of 10x. You receive (9 x $50,000) or $450,000 (assuming the entire fund has distributed 10x committed capital to investors).
Case 3: You receive $50,000 at work in a company that fails. You get nothing, but it also costs you nothing.
Q: Why give away our carry?
We believe that our biggest strength is our network of top entrepreneurs and investors. It turns out that highly competent and successful people are often friends with other highly competent and successful people, which is how many of our investments get referred to us. The per-deal carried interest structure is a way for us to show gratitude for our community, and also to align incentives to ensure that we are all working towards the same goals.
Q: Can I trade my Dollars at Work for cash?
No! Although it might be possible to convince someone to pay you in cash for your carried interest, allowing you to trade your Dollars at Work for cash undermines the alignment we are trying to create. We expect that the recipients of Dollars At Work will help the companies for whom they own upside until a liquidity event occurs. This program was created to align our entire community around our portfolio companies and reward good actors for their support.
Q: You mention something about philanthropy in your “8VC Values” essay. How does this relate?
We are allowing anyone who owns Dollars at Work in the 8VC fund to donate their earnings to charity. Should they decide to do so, we commit to matching their donations at a rate of 1:1 with a portion of our carried interest distributions.
Recipients can donate to a charity of their choice or select from one of the following:Give DirectlySend money directly to the extreme poor. We aim to reshape international giving. We’re backed by GiveWell, Google.org and – most importantly – rigorous evidence. givedirectly.com
Join the Fight to Alleviate Global Poverty. We are working to end global poverty by creating 20 million jobs by 2020, which will impact 100 million people. opportunity.org
We are Digital Defenders of Children, driving tech innovation to fight child trafficking and the sexual exploitation of children. wearethorn.org
DISCLAIMER: The information in this presentation material (the “Presentation Material”) is not complete and may be changed. This Presentation Material is not for the general public. It is to be treated as strictly confidential and not disclosed directly or indirectly to any party other than the recipient. This Presentation Material must not be acted on or relied on by persons who are not the persons to whom this material was directed. Any investment or investment activity to which this communication is related is available only to relevant persons and will be engaged in only with relevant persons. This Presentation Material is not an offer to sell any securities of the proposed fund (the “Fund”), and it is not soliciting an offer to any securities in any state or jurisdiction where the offer or sale is not permitted.
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