that competition for appropriate investment opportunities may limit significantly the number of opportunities available to the Fund and adversely affect the terms upon which investments can be made. There can be no assurance that the Fund will be successful in its efforts to identify attractive investment opportunities, and it is possible that the Fund’s Commitments will not be fully utilized if sufficient attractive investments are not identified and consummated by the Fund during the Investment Period.
Management of the Fund
The General Partner will make decisions with respect to the management of the Fund. Limited Partners have no right or power to take part in the management of the Fund. The Limited Partners will not receive the detailed financial information issued by portfolio companies that will be available to the Fund. Accordingly, the Limited Partners will not have the opportunity to evaluate the relevant economic, financial and other information that will be utilized by the General Partner in its selection of investments. An investor in the Fund must rely upon the ability of the General Partner with the assistance of the Management Company to identify, structure, and implement investments consistent with the Fund’s investment objectives and policies. Accordingly, no person should purchase Limited Partner Interests unless such person is willing to entrust all aspects of the management of the Fund to the General Partner.
Reliance on Management of Fund
The success of the Fund will be largely dependent upon the activities of the Fund Managers. The loss of one or more of these individuals could have a significant adverse impact on the business of the Fund and its financial performance.
Reliance Upon Portfolio Company Management
Although the Fund may seek representation on the board of directors of each of the portfolio companies or otherwise provide management and strategic planning assistance, the Fund will not have an active role in the day-to-day management of the companies in which it invests. To the extent that the senior management of a portfolio company performs poorly, or if a key manager of a portfolio company terminates employment, the Fund’s investment in such company could be adversely affected.
Potential Conflicts of Interest
The Fund Managers will continue to devote a portion of their time to the business of the Sprout Funds, NLV-I, NLV-II and to any future funds that they may organize in accordance with the Partnership Agreement. Conflicts may arise in the allocation of investment opportunities and the Fund Managers’ time among the Fund and other such partnerships and any such future funds. Prospective investors should be aware that there may be occasions when the General Partner, the Fund Managers, the Management Company and their affiliates will encounter potential conflicts of interest in connection with the Fund’s activities. The Partnership Agreement will contain certain protections for Limited Partners against conflicts of interest faced by the General Partner and its partners, but will not purport to address all types of conflicts that may arise. Moreover, as a practical matter, it may be difficult for Limited Partners to subject the behavior of the General Partner, the Management Company and their partners to close scrutiny.
63 CONTROL NUMBER 257 - CONFIDENTIAL
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