Frequently asked questions

Vanilla is Cooley's proprietary, in-house and cloud-based solution for raising and administering private closed-ended investment funds, such as venture capital and private equity funds. In development since 2017, Vanilla has been used by fund managers to raise capital, and high-net-worth individuals and institutions that regularly invest in this space have used Vanilla — with their investment information stored and ready for one-click import to your fund. New users and funds are added on an ongoing basis. Vanilla provides not only a built-in user base, but also substantial features and flexibility relative to competitive for-profit products.

For Cooley fund formation clients, the rest of Vanilla remains a value-added service: the platform is provided at no additional charge, and funds using it have enjoyed materially reduced fund formation expenses by eliminating billed time — particularly paralegal time spent reviewing and correcting subscription materials.

The one exception is a new fixed-price transfer at $495. This pricing applies only to certain types of transfers; it is not available for all funds or for all transfer types. Eligible transfers can be completed in as little as one day.^* Your Cooley team can confirm whether a particular transfer qualifies.

Subscription materials for private funds need to establish that the investors are qualified to invest and involve asking suitability questions that differ depending on the type of investor (individual versus trust, US versus non-US, etc.). Paper forms tend to be complex, and a significant proportion of paper documents are returned by investors with missing or inconsistent responses. Paralegals often spend considerable time manually addressing these issues in communication with investors, and the charges for making subscription materials legally suitable for closing can be material. Vanilla intuitively guides investors through the right questions, in the right order, so users can't submit an incomplete or inconsistent set of materials. With the process automated, paralegal billings are materially reduced, which is just one of the ways you can achieve cost savings by using Vanilla.

As an industry participant, we believe that we have an obligation to the ecosystem to help fund-subscribing processes be as efficient as they are profitable. We'd rather create a path for fund clients to save money, which is especially vital for smaller or first-time funds, but ultimately helps all funds. We'd prefer to have our team deployed on value-added services instead of billing for ministerial work such as correcting subscription materials. And we'd like to ensure that your investors don't have to take the time to do that work. Vanilla allows us to help funds reduce organizational costs and time spent, and ensuring this efficiency improves funds' internal rate of return and assists with long-term firm viability. Over time, we hope our clients will be even more successful, both financially and from an investor-satisfaction standpoint. We believe that all these benefits accrue not only to the fund managers we work with, but also to Cooley.

Investors enjoy myriad advantages. During the subscribing process, they avoid all paper forms and PDFs. Investors are asked the minimal number of qualification questions necessary and can electronically sign all documents in a matter of minutes. They can store their data, including W-8 and W-9 forms, anti-money laundering (AML) forms and contact info for future funds, whether with the same or unrelated managers. Your investors will avoid emails with large attachments, sparing their inboxes, and they have 24/7, life-of-fund access to copies of signed documents on a self-service basis. They also will enjoy post-closing functionality, including attending to amendments, communications and transfers. Simple estate planning or other non-negotiated transfers can be completed through Vanilla, typically with far reduced costs.

In our experience to date, all funds are likely to have some investors who can't or just don't want to sign electronically, and this scenario is fully accommodated by Vanilla. The uptake rate — meaning the percentage of investors who use Vanilla to complete all documents and e-sign — has historically been high. Vanilla seamlessly allows the Cooley paralegal team to input the investor data manually for any investors who do not wish to use Vanilla, so the cap table in Vanilla is always correct.

Fund managers can sign all documents electronically, and have 24/7 access to the specific status of each investor and the aggregate status of the fund raising. We have historically transmitted cap tables, usually in Excel, on a regular basis approaching closing. With Vanilla, fund managers can view the cap table themselves at any time and request an Excel export when they need one. The total amount ready for closing and the status of any particular investor are both available this way. Vanilla also sends email notifications as investors are admitted or closed upon, so fund managers stay informed of key changes without waiting for a manual update. This is another way Vanilla drives cost out of the system, as paralegals previously would have undertaken these tasks on a charged basis.

Your legal team at Cooley will enjoy significant efficiencies when you elect to use Vanilla. Much of the traditionally manual process is automated, freeing the team to focus on higher-value matters. Vanilla runs automated, rule-based compliance checks against the status of the offering — for example, flagging when an offering approaches the 3(c)(1) or 3(c)(7) investor-count limits or ERISA participation thresholds — so the Cooley team can address potential issues well ahead of closing, rather than catching them at or immediately before closing. Vanilla also performs an automated, name-based sanctions check on investors and provides ongoing automated sanctions screening thereafter. Monitoring of this kind is closely tied to the practice of law, which is one of the reasons we developed Vanilla in-house rather than relying on a third-party vendor.

Some of Vanilla's best benefits come post-closing, including:

• 24/7, life-of-fund access to documents for investors and fund managers;
• Storage of investor information for one-click reuse in future products, whether it's your next vintage, an SPV or another line of business;
• Access to electronic, automated transfers (and completion of non-negotiated estate-planning transfers for minimal cost); and
• Use for circulation and easy e-signature with amendments.

Vanilla generally has been received positively, but the most enthusiastic comments to date have come from investors, when they realize how easy it is to subscribe to "Fund 2" and beyond in Vanilla by reusing data and AML and tax forms.

Vanilla facilitates online completion of W-8 or W-9 forms, Cayman Islands and other non-US AML and KYC regulatory forms, etc. Common, simple forms such as the W-9 can be completed and e-signed or uploaded, and more complex forms can be uploaded by an easy drag-and-drop process. Vanilla stores all this information for investors to use in their next subscription, whether for the same or an unrelated manager.

Vanilla allows the manager to request contact information, and define multiple and differentiated recipients for various fund-reporting functions, such as capital call notices, distribution notices, annual reports and K-1 forms. Vanilla also stores this info for investors to use in their next subscription, whether for the same or an unrelated manager.

Vanilla was an early entrant to this product space and has an established base of registered users. Allowing registered users to store data for use with the same or unrelated managers is highly advantageous for all parties. A fund manager using Vanilla for the first time often will find that users are already registered within Vanilla. This is an excellent end result for investors, as they can use one-click access to bring their investor-suitability responses, W-8 and W-9, AML/KYC and contact information to your fund. These synergies are likely to increase as more funds we work on adopt Vanilla.

Vanilla allows easy export of data in various formats, including CSV, for use with Salesforce, common fund accounting software and common software used by third-party administrators. Your fund administrator typically will have direct access to Vanilla and its self-service options. We work with a select group of preferred administrators who are "Vanilla certified" and regularly serve on client teams in collaboration with legal and Vanilla teams at Cooley. Please ask us for more information when selecting a fund administrator, and we will point you in the right direction.

There are several reasons we think you should use Vanilla.

The first reason is cost and time savings. With Vanilla, you avoid one-time setup and ongoing software fees that for-profit companies must charge to stay in operation. In addition, many third-party products on the market require one-off, "bespoke" coding of your fund documents. In Vanilla, Cooley's forms of agreements are already coded and ready to go, so we can have you up and running quickly, at no charge.

The second reason is functionality. Third-party software firms cannot engage in the practice of law, which limits their ability to offer certain features that are core to Vanilla, including legal monitoring tied to the offering's compliance status.

The third reason is safety and security. As one of the world's largest law firms, Cooley has the ability to design and deploy an appropriate level of security for this sort of sensitive undertaking. Would you be comfortable giving your investor information to a startup company? How secure is the data? And what if that startup is not around by the next fund and your investors have to start over?

The fourth reason is compliance. As your law firm, we can support adherence to laws, rules and regulations in the provision of the software. For example, some states require specific levels of security for the transmission of Social Security numbers in W-9 forms, meaning that non-law firm providers of third-party software may need to be monitored, at the user's cost, by a law firm. We built Vanilla in-house with these legal considerations in mind.