July 10, 2014 / 9:12 PM / in 4 years

New VC firm Upside gives entrepreneurs a piece of its fund

SAN FRANCISCO, July 10 (Reuters) - Most venture capital firms give cash to entrepreneurs. Now Upside Partnership plans to give them a stake in its new fund, too.

The $30 million fund, announced on Thursday, is the brainchild of Kent Goldman, a former managing partner at First Round Capital. Upside will invest at the seed stage, meaning very early in a startup’s life.

In a highly unusual move, part of the fee the fund takes on profits will go directly to the fund’s entrepreneurs. Normally, those fees go directly to the fund’s partners, not the entrepreneurs whose projects get financing from the fund.

Those fees, known in the venture capital business as carry, are generally around 20 percent to 30 percent of the profits. A percentage of that fee, described by Goldman as in the double digits, will go to entrepreneurs.

“We believe this will strengthen the bonds of our founder community,” Goldman said in a blog post, adding that founders often get good advice from other founders.

“We want to encourage this type of collaboration.” (Reporting by Sarah McBride; Editing by Jan Paschal)

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