Item 5: Fees and Compensation
In consideration of Foundry Group’s investment advisory and other services, Foundry Group typically
receives a management fee from each of the Funds, which is generally equal to a percentage of the
total capital commitments to such Fund. The fee percentage and/or the base upon which the fee is
calculated may vary with the size of the Fund and may also vary over the life of the Fund, as negotiated
and determined at the time the Fund is established and as set forth in its Governing Documents. The
percentage of the management fee generally starts at 1.0%-2.5% annually and is then reduced upon
occurrence of certain events that are fully described in the Governing Documents of each Fund
(“Adjustment Date”). After the Adjustment Date, the management fee generally accrues at a rate based
on a percentage of the aggregate capital contributions of all investors used to make investments in
portfolio companies that have not been sold or written off.
In addition, affiliates of Foundry Group, as general partners of the Funds, typically receive certain
allocations and distributions calculated and charged based on a share of capital gains on or capital
appreciation of the assets of such Fund, as negotiated and determined at the time such Fund is
established and as set forth in its Governing Documents. These allocations and distributions are
commonly known as “carried interest.” Foundry Group’s affiliates generally do not receive carried
interest until all investors have received aggregate distributions equal to the sum of their capital
contributions to the Fund.
Management Fees and carried interest distributions generally are not negotiable. However, Foundry
Group (or an affiliate) has discretion to reduce or waive Management Fees and/or carried interest
distributions. Foundry Group’s affiliates generally are subject to the Management Fee and carried
interest distributions. However, Foundry Group anticipates using its discretion to waive the
Management Fee and carried interest distributions for Foundry Group’s affiliates in certain instances
in the future.
Management Fees are typically funded with capital contributions drawn for such purpose, but may
also be funded with or withheld from proceeds from investments. Carried interest distributions
generally will be distributed to Foundry Group’s affiliates from time to time upon the disposition of
investments by a Fund and are distributed to such affiliate in accordance with the terms of the
applicable Governing Document.
Foundry Group’s general policy is not to charge portfolio companies any additional fees. Unless it is
specifically provided otherwise in the applicable Governing Documents, the Management Fee is
reduced by one hundred percent (100%) of any net transaction, break-up, consulting or directors’ fees
received by Foundry Group or its members from any portfolio company of the Fund.
Foundry Group and its affiliates generally pay all of their own operating and overhead costs and
expenses, including salaries, benefits, and rent. In addition to any Management Fees payable to
Foundry Group, a Fund will incur certain charges imposed by third parties and other expenses. Such
expenses may include (but are not limited to): (i) organizational and liquidation expenses of each
Fund; (ii) any sales or other taxes that may be assessed against the Fund; (iii) commissions or
brokerage fees or similar charges incurred in connection with the purchase or sale of securities,
including any merger fees payable to third parties (whether or not any such purchase or sale is
consummated); (iv) fees (if any) and expenses of members of the Fund’s advisory committee
(including travel-related costs and expenses); (v) the costs and expenses (excluding travel-related
expenses, other than travel-related expenses of members of the Fund’s advisory committee) of hosting
annual or special meetings for the Fund’s investors or advisory committee, or otherwise holding
meetings or conferences with investors of the Fund, whether individually or in a group; (vi) interest
expense for borrowed money (if any); (vii) all expenses relating to litigation and threatened litigation
involving the Fund, including indemnification expenses; (viii) expenses attributable to certain
consulting services (other than consulting fees for services that could have been reasonably rendered
by Foundry Group, its partners and employees) and to normal and extraordinary investment banking,
commercial banking, accounting, auditing, tax, appraisal, insurance, legal, custodial, and registration
services provided to the Fund, including, without limitation, all such services relating to the actual or
proposed purchase or sale of securities by the Fund (whether or not any such purchase or sale is
consummated); (ix) other due diligence expenses (such as market diligence and background checks)
with respect to actual or proposed investments by the Fund, whether or not consummated; (x) “broken-
deal” fees and expenses, other than travel, incurred in connection with proposed investments by the
Fund that are not consummated; (xi) fees payable to any placement agent engaged by Foundry Group
in connection with the offering of interests in the Fund (subject to an offset of such amount against
the Management Fee payable by the Fund to Foundry Group); and (xii) all other expenses properly
chargeable to the activities of the Fund.
For applicable investments in each of the Other Investment Funds, the Funds may pay management
fees, carried interest, and other expenses to a management company and/or general partner that is not
affiliated with Foundry Group. Fees paid to Foundry Group for investment advisory services are
separate and distinct from the fees and expenses charged by the independent investment adviser and/or
general partner for that entity’s advisory/management services.
The types of other fees and expenses incurred will vary from Fund to Fund. Please refer to the
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