FPG Ad Astra VIII Update

We always do our best to give everyone a clear understanding of how things work, so here is some additional context on our email below:

Thank you for moving quickly with paperwork and funding over the last week for FPG Ad Astra VIII. We’ve been working hard on the deal and have a few updates to share.

During our conversations with the underlying fund this week, we encountered a challenge with the structure of the fund that will limit our investment in the fund to 40% of committed capital for FPG Ad Astra VIII. A more detailed explanation can be found here, but ultimately this means ~40% of capital will be invested in the fund now, and we will continue looking for similar opportunities for the remaining 60%. We’re working with SpaceX and a number of other partners we’ve worked with before to find a favorable solution — this is our top priority.

We are still just as excited about the initial tranche of investment, and we’re optimistic that this adjustment will ultimately have a minimal impact, if any. Some amendments to the docs are necessary, and will be available soon. While we anticipate that everyone will be moving forward, please let us know in the next 24 hours if you would like to discuss withdrawing. As always, we’ll keep everyone posted as things progress from here.

We appreciate your patience and trust, and if you have any questions at all, don’t hesitate to ask. It’s never easy, but we’re grateful to have these opportunities and we’ll always do our best on your behalf. Thank you!

Generally speaking, venture capital funds operate under certain exemptions allowed in the Investment Company Act (ICA). These exemptions allow private investments without venture funds having to register as public offerings. When we began conversations with the underlying fund, our understanding based on those conversations, and the initial documents we were provided, was that the underlying fund would operate under the 3(c)(7) exemption of the ICA. This exemption allows for unlimited qualified purchasers to invest in the fund without having to register as a public offering.

With this expectation and after review with our legal counsel, we structured FPG Ad Astra VIII as a 3(c)(7) fund and admitted only qualified purchasers. Unfortunately, we’ve now learned that the underlying fund has actually chosen a 3(c)(1) exemption structure, which only allows 100 accredited investors. Funds like FPG Ad Astra VIII can be treated as 1 investor only if certain requirements are met, one of those requirements being that only 40% of our fund’s assets can be invested in the underlying fund. Without meeting those requirements, our investor count would push the underlying fund over the limit and we would be unable to participate at all. Had the underlying fund been structured as a 3(c)(7), we would not have faced this particular restriction. While we explored a number of solutions with our legal counsel and the underlying fund’s legal counsel, we ultimately concluded that the only way to proceed would be to limit our investment to 40%.

We will continue to work hard on a positive solution, and we appreciate your partnership! Please email us at gp@firstprinciples.group if you have any questions!

— Rob & Ben