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THE CLUB DEAL
- A Club Deal is a model that brings together multiple investors with a shared vision for supporting transformative businesses.
- It leverages collective expertise, resources, and networks, enabling investors to access larger deals, diversify their portfolios, and mitigate individual exposure to risk.
- Club Deals require strong coordination among investors and their agreements help in mitigating disputes and aligning investor objectives.
- They offer flexibility, shared expertise, and resource pooling but they have their complications.
- One of the biggest hurdles for Club Deals is competition with large VC funds. They need to sharpen their pitch by leveraging niche expertise or specific sector knowledge to stand out.
- Access to premium opportunities can be a significant challenge for Club Deals and building robust deal flow involves cultivating relationships with networks.
- Assessing potential investments is a challenge but can be tackled by ensuring rigorous due diligence.
- Carried interest and management fee are some of the common modes of remuneration in Club Deals.
- Flexible profit-sharing arrangements that are pre-agreed upon in the shareholders’ agreement are also common.
- Corporate investors or strategic partners may prioritize non-monetary benefits such as industry insight or customer acquisition opportunities.
- Aligning the incentives of all parties ensures not just financial success but a rewarding collaborative experience in Club Deals.
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