This episode is also available as a blog post: https://10leaves.ae/publications/difc/new-difc-venture-capital-funds-regime
The DIFC has implemented a path-breaking VC Fund Manager Regime, that promises to add to the current startup ecosystem being built through the DIFC Fintech Hive and the DIFC Innovation Hub. The regime is a carve-out of the already fast-tracked Restricted Fund Manager regime, that is in place for entities that wish to only manage private funds
Definition of a VC Fund as per the DIFC:
A VC fund would have to:
- Be an Exempt Fund or a Qualified Investor Fund, open to Professional Clients only;
- Be a closed-ended fund;
- Invest at least 90% of it’s committed capital in unlisted businesses, which are not more than 10 years old; and
- Fund the underlying ventures through equity instruments only
VC funds are usually closed-ended, for a fixed tenure and can be structured as Closed-ended Investment Companies or Partnerships.
Other benefits:
In addition to the above, the DFSA:
1. Allows self-custody of fund property;
2. Makes the appointment of an investment committee optional;
3. Allows VC funds to invest more than 25% in a single undertaking;
4. Makes internal audit of the fund manager optional;
5. Removes the requirement for a Finance Officer;
6. Removes the requirement for appointment of a Compliance Officer until initial commitments of capital are required; and
7. Apply simpler capital requirements
