💡 Did you know that QSBS can increase after-tax returns for founders, GPs, and LPs - thus more money in the bank? In our latest blog, Laura Thompson, Partner at Sapphire Partners, breaks down the power of QSBS and the four steps emerging managers should take to leverage this tax provision effectively. #VentureCapital #QSBS #EmergingManagers
💰The unspoken secret to making more money for founders, GPs and LPs… QSBS is a powerful but often overlooked tax incentive that can significantly boost after-tax returns. In a brand new blog, Laura Thompson, Partner at Sapphire Partners, breaks down QSBS—the qualifying and disqualifying factors, how emerging managers can leverage this provision, and just how big the impact can really be. 💄Take “Taylor” for example, a founder who raises $5M at a $20M valuation for her AI-based tech that perfectly applies red lipstick and ensures it lasts at least four hours... or the duration of an NFL overtime game. 💸She initially funds the company (essentially no cost basis, or $0.0001/share) and then raises $5M at a $20M valuation to finish the technology, manufacture and distribute the product. 🏈An angel investor – call him Travis – commits $1M, and hypothetical venture firm KC Capital puts in $4M. After 4 years and 10 months, Taylor receives an acquisition offer of $100M. By negotiating and waiting to close the deal after the 5-year QSBS threshold, Taylor and her investors save millions in federal capital gains taxes. ❤️🤍Taylor’s after-tax proceeds increase by $2M, while Travis, the angel investor, sees an additional $800K —a 22% boost. KC Capital also benefits, adding potentially $3.2M in additional after-tax proceeds for individual GPs and LPs. As we mention in other articles (see link in comments), we believe fund management alone cannot make a great fund (you also need spectacular investments💥), but good fund management can make returns even better for GPs and LPs. Read the full QSBS blog found at the link in comments - including the four tactical steps emerging managers should be taking now to leverage QSBS. *We noticed a mistake in the visual below: The bottom chart should reflect "Sale - QSBS." The correct version of the graphic is now available on our blog and in the comments. #VentureCapital #QSBS #EmergingManagers