Founded in 2001, Valor Management LLC (formerly known as Valor Management Corp.), doing business as Valor Equity Partners, is a private equity firm focused on equity and equity-related, control and non-control investments in companies across various stages of development. Valor Equity Partners is an investment management company registered with the Securities and Exchange Commission (“SEC”) as an investment adviser. Valor Equity Partners and its other affiliated advisory entities, including Valor Equity Advisors, L.P. (“Fund IV Advisor”), and the General Partners (defined below) (collectively, “Valor”), operate as a single advisory business and this Brochure describes the practices of all Valor entities. Valor is based in Chicago and has additional offices in New York and San Francisco. Valor currently manages the following private equity growth funds: Valor Equity Partners II L.P. (“Valor II”) and Valor Equity Partners II-A L.P. (“Valor II-A” and together with Valor II, “Fund II”); Valor Equity Partners III, L.P. (“Valor III”) and Valor Equity Partners III-A, L.P. (“Valor III-A” and together with Valor III, “Fund III”); Valor Equity Partners IV L.P. (“Valor IV”), Valor Equity Partners IV-A L.P. (“Valor IV-A”), and Valor Equity Partners IV-B L.P. (“Valor IV-B” and together with Valor IV and Valor IV-A, “Fund IV”); Valor Equity Partners V L.P. (“Valor V”), Valor Equity Partners V-A L.P. (“Valor V-A”) L.P., and Valor Equity Partners V-B L.P. (“Valor V-B” and together with Valor V and Valor V-A, “Fund V”) (Fund II, Fund III, Fund IV, and Fund V collectively referred to as the “Growth Funds”). Valor also manages Valor Siren Ventures I L.P. (“VSV I”), Valor Siren Ventures I-A L.P. (“VSV I- A”), and Valor Siren Ventures I-B L.P. (“VSV I-B” and together with VSV I and VSV I-A, “VSV”). VSV is focused on making early-stage food, food technology, and retail technology investments. VSV and the Growth Funds are collectively referred to herein as the Main Funds. In addition, Valor manages Valor R&D Series LLC (“Valor R&D”), an investment vehicle primarily for Valor, its employees, its strategic advisors, and their respective families, as well as certain other investors. Valor R&D primarily invests in early stage, smaller capitalized investments (referred to herein as “VC Investments”). While VSV and the Growth Funds can invest in VC Investments, subject to any applicable limitations in their Governing Documents (defined below), the investments made by Valor R&D are VC Investments that Valor has determined do not meet the presentment requirements of the Main Funds or are not suitable investments for the Main Funds. In addition, as further described in Item 11, from time to time, Valor provides certain existing investors or third parties the opportunity to participate in portfolio company investments through single purpose or co-investment vehicles managed by Valor (each, a “Co-Investment Fund”). Unless otherwise noted, references throughout this Brochure to “Funds” are generally intended to include the Main Funds, Valor R&D, and the Co-Investment Funds. Valor has the right to manage additional funds in the future and expects any future funds will have terms similar to the Funds. Each Fund’s general partner (or manager or managing member) (collectively, the “General Partners”), in accordance with SEC guidance, is deemed registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) pursuant to Valor Equity Partners’ registration. Fund IV is also advised by Fund IV Advisor. See Item 10 for further information about these entities. Each General Partner has the authority to make investment decisions on behalf of each respective Fund. Valor, and in the case of Fund IV, Fund IV Advisor, which is a relying adviser, provide certain day-to-day management services to the Funds. Valor’s investment advisory services to the Funds typically consist of identifying and evaluating investment opportunities, negotiating the terms of investments, managing and monitoring investments and ultimately selling such investments, although Valor’s investment advisory services to the Co-Investment Funds are provided with respect to only one portfolio company investment that was known to participating investors at the time they invested. Likewise, Valor provides investment advisory services to Valor R&D on an investment-by-investment basis, since it does not have a portfolio construction mandate like the Main Funds. The Funds invest predominantly through negotiated transactions in private companies, although investments in public companies are permitted in certain instances. Valor personnel generally serve on portfolio companies’ respective boards of directors or otherwise act to influence management of such companies, except in the case of companies in Valor R&D’s portfolio. Valor provides advisory services to each Fund in accordance with, as applicable, the Fund’s private placement memorandum, investment management or advisory agreement, limited partnership (or similar) agreement, and side letters or similar agreements (“Side Letters”) with certain investors in the Fund and any other governing documents (collectively, the “Governing Documents”). Valor provides and tailors its investment advice to each Fund based on its investment objectives, as described in its private placement memorandum or other Governing Documents, not based on the individual needs of Fund investors. Fund investors participate in the applicable Fund’s overall investment program and generally cannot impose restrictions on Valor’s investment advisory services or authority, although they may be excused from a particular investment due to legal, regulatory or other applicable constraints, pursuant to the terms of the applicable Governing Documents, or they may have entered into a Side Letter that has the effect of establishing rights under, or supplementing or altering the terms in, a Fund’s partnership agreement or an investor’s subscription agreement, including rights and alterations related to economic terms, fee structures, excuse rights, information rights, co-investment rights, or transfer rights. Valor’s advisory services are further described in the applicable Governing Documents and generally in Item 8 below. As of December 31, 2018, Valor had regulatory assets under management of $3,365,811,499, all managed on a discretionary basis. Valor does not manage any assets on a non-discretionary basis. Antonio J. Gracias is the ultimate majority owner and control person of Valor Management LLC (doing business as Valor Equity Partners). Specifically, Valor Management LLC has two members: Valor Management L.P. and Valor Funds Group LLC, which is the managing member of Valor Management LLC and the general partner of Valor Management L.P. Mr. Gracias is the managing member of Valor Funds Group LLC. In addition, through his direct holdings and as the sole shareholder of Valor Holdings Corp., Mr. Gracias owns the majority of both Valor Management L.P. and Valor Funds Group LLC. please register to get more info

Typically, Valor receives a management fee and its affiliated General Partners are allocated carried interest (as more fully described in Item 6 below) as compensation for providing investment advisory services to the Funds. Valor’s management fees, carried interest allocations, and terms related to other compensation payable to Valor and its affiliates are determined by Valor at the time of the establishment of the relevant vehicle and negotiated with participating investors prior to the time they invest. Below is a general description of fees, compensation and expenses of the Funds. Differences exist from Fund to Fund, and certain Funds may not charge certain fees, compensation or expenses that other Funds charge. Valor encourages existing and prospective Fund investors to review the applicable Fund’s Governing Documents for further details regarding fees, compensation and expenses.
Management Fee
The amount, timing, and method of calculation of a Fund’s management fee is specified in the Fund’s Governing Documents. Valor charges each Main Fund a management fee, generally 2% per annum. Certain Co-Investment Funds charge management fees, certain Co-Investment Funds offer investors a choice of terms that include management fee and no management fee options (the General Partner is entitled to a higher carried interest percentage under the no management fee options), and certain Co-Investment Funds do not charge a management fee, although Valor may charge management fees with respect to any future Co-Investment Fund. Investors in Valor R&D are not charged a management fee. Generally, management fees are calculated initially based upon each investor’s capital commitment for a stated period of time, which is typically the period of time during which each Fund is actively making investments, and thereafter (or upon the occurrence of certain specified events) any management fees payable are based upon each investor’s invested capital, subject to various other factors as further described in the Fund’s Governing Documents. Each General Partners may, in its sole discretion, waive all or a portion of the management fee for certain investors. Fees are generally waived for Valor employees, affiliates, and their families and strategic advisors investing in a Fund. The Funds invest on a long-term basis, and investors generally cannot withdraw capital from the Funds. Accordingly, management fees are expected to be paid, except as otherwise described in the Governing Documents, throughout the Fund’s term. The Funds pay Valor non-refundable management fees quarterly in advance, and Valor may call capital, use Fund borrowings, deduct from Fund investment proceeds, or take any other action permitted under the Governing Documents to satisfy amounts owned. Installments of the management fee payable for any period other than a full calendar quarter are adjusted on a pro rata basis according to the actual number of days in such period. Certain Governing Documents permit the applicable General Partner or Fund IV Advisor to waive or reduce the management fee to which it is entitled in favor of Fund investors making a capital contribution to the Fund on behalf of the applicable General Partner or Fund IV Advisor. The amounts are effectively invested in the relevant Fund on behalf of, and operate to reduce the amount of, capital required to contributed to such Fund by, the applicable General Partner or Fund IV Advisor. For fee-bearing investors, capital contributions for management fees reduce such investor’s unfunded commitment to a Fund.
Management Fee Offsets
As further described below and in the applicable Fund Governing Documents, Valor and its personnel may receive certain directors’, break up, transaction, or monitoring fees, in the form or cash or equity, and management fees for the Main Funds are generally offset (although not below zero) by the receipt of such fees. Generally, 50% of Fund II’s pro rata share of fees received and 100% of the other Main Funds’ pro rata share of fees received offset the management fees otherwise payable, in each case as set forth in the applicable Fund’s Governing Documents. As further described in this Item 5 and elsewhere herein and in the applicable Fund Governing Documents, fees and expenses paid or reimbursed by a portfolio company or a Fund in connection with Operations Group Services (as defined below) and certain other services provided by Valor persons, such as compensation paid to a Valor person for serving as an employee of the portfolio company, are generally not subject to offset. Valor R&D and the Co-Investment Funds do not receive the benefit of a management fee offset or otherwise share in such fee income. Offsets are applied after taking into account certain expenses and any management fee waiver.
Offering and Organizational Expenses
Each Fund is responsible for the payment of organizational and start-up expenses in amounts set forth in its respective Governing Documents.
Fund Expenses
In addition to the management fee and carried interest allocation and the expenses described above under Offering and Organizational, the Funds bear certain expenses related to their ongoing operations. As set forth more fully in their respective Governing Documents, each Fund bears all costs, expenses, liabilities and obligations related to its activities, investments, and business to the extent not paid or reimbursed by portfolio companies, including without limitation, (i) all costs, expenses, liabilities and obligations attributable to structuring, acquiring, organizing, holding, valuing and disposing of a Fund’s investments (including, without limitation, interest on and fees and expenses arising out of all borrowings and guarantees (and other credit support obligation), including the arranging thereof, made by a Fund or by Valor on behalf of a Fund, registration expenses and brokerage, finders’, custodial, depositary and other fees), (ii) legal (which includes expenses incurred in connection with complying with provisions in Side Letters and “most favored nations” provisions and costs of winding up and liquidating a Fund), accounting, administration, brokerage, transfer, valuation, appraisal, auditing, insurance (including, without limitation, directors and officers and errors and omissions liability insurance), travel (except as provided in the applicable Governing Documents), litigation and indemnification costs and expenses, judgments and settlements, consulting, finders’, financing, filing, appraisal, and other fees and expenses (including, without limitation, expenses associated with the preparation and distribution of a Fund’s financial statements, tax returns and Schedule K-1s, Forms D, filings required under the European Union Alternative Investment Fund Managers Directive or any other administrative, regulatory or other Fund-related reporting or filing (including the cost of accounting or financial management software, secure communications to investors, monitoring investor portfolio activity and similar administrative functions), expenses associated with the services of a Fund’s third party administrator, and the costs and expenses of cybersecurity software, consultants and insurance), (iii) out-of-pocket costs and expenses of a Fund’s advisory board (an “Advisory Board”) incurred in accordance with the applicable Governing Documents and a Fund’s share of the reasonable out-of-pocket costs and expenses of strategic advisory members incurred in their capacities as such, (iv) all out-of-pocket costs, expenses, liabilities and obligations incurred by a Fund or any Valor person relating to investment and disposition opportunities for a Fund not consummated (including, without limitation, legal, accounting, brokerage, valuation, auditing, insurance, travel, consulting, finders’, financing, filing, real estate title, appraisal and printing expenses and/or any reverse termination and/or other similar fees) (collectively, “Broken Deal Expenses”), including Broken Deal Expenses to the extent not borne by any Co- investment Funds, (v) fees, costs and expenses related to the organization or maintenance of any holding vehicle or intermediate entity (such as a Luxembourg entity) used to acquire, hold or dispose of any one or more investment(s) or otherwise facilitating a Fund’s investment activities, including without limitation any travel and accommodation expenses related to such entity and the salary and benefits of any personnel (including Valor personnel) reasonably necessary and/or advisable for the maintenance and operation of such entity, or other overhead expenses in connection therewith, (vi) all out-of pocket fees and expenses incurred by a Fund or any Valor person in connection with any conference or meeting of investors (including, without limitation, travel, set-up, lodging and related expenses), (vii) a Fund’s share of the costs of providing or making available the capacity to provide Operations Group Services (as further described below) to the extent not reimbursed (without generating any reduction in management fees) by an existing or prospective portfolio company or subsidiary thereof, subject to any cap set forth in the applicable Fund Governing Documents, (viii) any taxes, fees and other governmental charges levied against a Fund, (ix) placement fees, (x) costs and expenses that are classified as extraordinary expenses under generally accepted accounting principles (“GAAP”), and (xi) certain excess organizational expenses (although they generally offset a Fund’s management fees (if there is one) as noted in applicable Fund Governing Documents). The Funds may also bear expenses indirectly to the extent a portfolio company pays expenses, including expenses of Valor and/or its affiliates (see “Portfolio Company Remuneration”, below). Such expenses generally include travel to and from portfolio companies. For more information about expenses incurred for brokerage costs, please see Item 12 below. The foregoing expenses may be borne directly by a Fund or indirectly through reimbursement or payment, if any, by portfolio companies. There will likely be circumstances where any such amounts which were expected or intended to be paid, reimbursed or borne by portfolio companies are not— in which case a Fund (and not Valor) will instead bear such expenses. From time to time, a General Partner will be required to decide whether costs and expenses are to be borne by a Fund, on the one hand, or a General Partner, Valor and/or other Funds, on the other. Certain expenses may be suitable for, and borne by, only the Funds, a particular parallel vehicle (as opposed to all of the entities in a Fund family), or one or more, but not all, participating Funds. Or, as is more often the case, expenses may be allocated pro rata among each Fund (or related vehicle) in a Fund family and/or each Fund participating in an investment even if the expenses relate only to particular vehicle(s) and/or investor(s) therein. In general, Co-Investment Funds and co-investors do not bear Broken Deal Expenses (and, conversely, do not share in any break up fees paid or received in connection with an unconsummated transaction). Valor will make such judgments in its good faith discretion in accordance with applicable Fund Governing Documents and Valor’s policies and procedures, notwithstanding its interest in the outcome, and may make corrective allocations after the fact should it determine that such corrections are necessary or advisable.
Operations Group Services
Valor provides operational consulting services (the “Operations Group Services”) to portfolio companies of the Funds it manages. As Operations Group Services are provided, with consent of the portfolio company’s management team, Valor generally invoices the portfolio company for Operations Group Services at an agreed upon rate plus a per diem allowance for travel, lodging, and daily expenses per an engagement letter with each portfolio company. The daily rate is determined by Valor to be comparable to, or less than, what an external third party consultant would charge for similar operational consulting services. Valor’s determination of third party comparable fees is based on its subjective understanding obtained through its own hiring of third party consultants and other market information, and is not based on any comprehensive or formal evaluation that is updated on a regular basis. Each month, Operations Group personnel generally create time sheets, which are reviewed by Valor’s Finance department and appropriate partner working with the portfolio company, before being approved for billing. In addition, as set forth in the applicable Governing Documents, Valor can recover certain Operations Group Services costs from the Main Funds, subject to certain dollar limitations. In the event that collections for Operations Group Services are greater than the cost of the Operations Group to Valor, any profit is rebated back to the appropriate Fund, as described in the applicable Fund Governing Documents. To date, Valor has never realized any profit on providing Operations Group Services to portfolio companies (when determined by netting out the internal Valor costs for salary and other items of overhead for the personnel who provide Operations Group Services).
Third Party Professionals
In addition to the Operations Group Services, Valor and its affiliates also engage and retain advisers, consultants and other similar professionals who are not employees or affiliates of Valor and who may, from time to time, receive compensation from, or allocations with respect to, portfolio companies and/or other entities, may acquire or be granted equity in portfolio companies, and may be offered the opportunity to co-invest with the Funds, either directly or through a Co-Investment Fund. These professionals may also incur expenses while working with Valor portfolio companies (such as travel expenses), and such expenses typically are paid or reimbursed either by the relevant portfolio company or the relevant Fund. In such circumstances, these amounts will not be deemed paid to or received by Valor and its affiliates and such amounts will not be subject to the fee offset arrangements described above.
Portfolio Company Remuneration
Valor may receive director’s fees, consulting fees, commitment fees, monitoring fees, break-up fees and success fees or other remuneration (including options, warrants or other equity securities), from existing or prospective portfolio companies. The amount of these other fees and remuneration are determined by Valor on a transaction by transaction basis, subject to the terms set forth in each Fund’s Governing Documents. Monitoring fees are determined based on the complexity of the transaction and the associated portfolio company and are generally payable quarterly in advance. The Funds, as investors in the portfolio companies paying such fees, bear the costs of these fees indirectly, but, as further described in this Item 5, the pro rata portion of such fees attributable to the Main Funds offset in whole or in part the management fee of each Main Fund, as set forth in the applicable Governing Documents. However, any reimbursement received by Valor from a portfolio company for out-of- pocket expenses, as payment for services provided to a portfolio company in the ordinary course, as compensation to a Valor person for serving as an employee of a portfolio company, or as compensation for Operations Group Services will not be offset against the management fee payable by the Funds. Each Fund’s reimbursement mechanism differs as per such Fund’s Governing Documents. Valor does not accelerate monitoring fees.
Other Expenses
Certain Valor personnel may be seconded to one or more portfolio companies and provide finance and other services to such portfolio companies; the compensation for such personnel during the secondment will be borne by the relevant portfolio company. To the extent Valor receives any fees or expense reimbursement from the portfolio companies with respect to such personnel, they will not result in any offset to the management fee payable by the relevant Fund. please register to get more info

The General Partners of the Main Funds and certain Co-Investment Funds are entitled to a performance-based fee, known as a carried interest distribution. Carried interest distributions are subject to clawbacks to the extent that a General Partner is paid in excess of its entitled distribution. This distribution structure is described in detail in each Fund’s Governing Documents. Each Main Fund General Partner generally receives a 20% carried interest allocation subject to an annually compounded preferred return hurdle and subject to a full return of capital, including capital contributed for all relevant Main Fund partnership expenses, including management fees. With respect to Co-Investment Funds, the carried interest to which a Co-Investment Fund General Partner is entitled varies (including by investor with respect to Co-Investment Funds that offer investors management fee and carried interest options), but generally is no more than 20% and is subject to a full return of capital, including capital contributed for specified partnership expenses, including any management fees payable to Valor, and to an annually compounded preferred return hurdle or a multiple of capital return hurdle. These performance fee arrangements have been structured subject to Section 205(a)(1) of the Advisers Act in accordance with the available exemptions thereunder, including the exemption set forth in Rule 205-3. The General Partner of each Main Fund may, in its sole discretion, waive or reduce the amount of carried interest for an investor in a Fund. Specifically, Fund investors who are Valor principals and employees or their respective family and friends or strategic advisors generally pay reduced carried interest or none at all. Similarly, investors in Valor R&D do not pay carried interest. The fact that each General Partner’s carried interest distributions are based on the performance of the respective Fund may create an incentive for a General Partner to make investments that are more speculative than would be the case in the absence of such distributions. In addition, the manner in which a General Partner’s entitlement to carried interest is determined may result in a conflict between its interests and the interests of Fund investors with respect to the sequence and timing of disposals of investments. However, Valor believes this incentive is mitigated by the fact that any losses will reduce such Fund’s performance and thus a General Partner’s carried interest distributions. Valor manages multiple Funds with similar investment strategies on a side-by side basis. As a result of the foregoing, Valor may have conflicts of interest in: (i) allocating its time and activity among the multiple Funds; (ii) allocating investments among the multiple Funds; and (iii) effecting transactions among the multiple Funds, including ones in which Valor and/or the General Partners may have a greater financial interest. These conflicts of interest may create an incentive for Valor to favor a Fund in which it and/or a General Partner have a greater financial interest with respect to allocation of time and activity, limited investment opportunities, or investments that Valor regards as more attractive or better performing. As such, Valor has implemented policies and procedures designed to address investment allocations, and, in addition, the Funds’ Governing Documents address allocations of investment opportunities. For a further description of allocation factors relevant to co-investment opportunities, please see Item 7. please register to get more info

Valor provides portfolio management services to private fund clients, including: the Growth Funds, which focus on building portfolios of equity and equity-related, control and non-control investments, VSV, a fund focused on early-stage food, food technology, and retail technology investing; the Co- Investment Funds, which are single purpose or co-investment funds; and Valor R&D. Investors in the Funds must meet certain suitability and other qualifications prior to making an investment in the Funds. In particular, the Funds limit their respective investors to persons who are “accredited investors” as defined in the Securities Act of 1933, as amended, and, depending on whether the investor is expected to pay performance fees and/or the exemption from registration as an investment company Investment Company Act of 1940, as amended (the “Investment Company Act”), being relied upon, “qualified clients” as defined in the Advisers Act and/or “qualified purchasers” or “knowledgeable persons” as defined in the Investment Company Act. Fund investors include a broad range of U.S. and non-U.S. investors, including, among others, high net worth individuals, corporate pension plans, charitable institutions, foundations, endowments, public pension plans, trust programs and other U.S. and non-U.S. institutions. In addition, employees and other persons associated with Valor and/or its affiliates are typically investors in the Funds. The Main Funds stated minimum capital commitment for investors is $5 million, but commitments of less than $5 million have been, and can be, accepted at the discretion of the applicable Fund’s General Partner. There was no minimum contribution for investors in any other Fund. Co-investment opportunities may arise whenever Valor has the opportunity for an investment in an existing or prospective portfolio company and Valor determines that all or a portion of the applicable opportunity is not required to be offered to, or is not appropriate for, a Fund. Valor selects the investors that are permitted to co-invest in a particular portfolio company in its sole discretion based on various factors, including any relevant provisions of the applicable Funds’ Governing Documents and such other factors as Valor may consider in its sole discretion, including those that may be specified from time to time in its policies and procedures on investment allocation and co-investments as further described in the discussion of co-investment opportunities under the Conflicts of Interest section of Item 8. Opportunities to invest in a portfolio company may be made available to any person or entity, including without limitation strategic investors, lenders, deal sources, other private equity or venture capital firms, Fund investors, other persons or entities affiliated, associated or otherwise known to Valor or its personnel and unrelated third parties. While one or more investors in the Funds may be invited to co-invest in the Fund’s portfolio companies, in Valor’s sole discretion all or a portion of any co-investment opportunity may be offered to investors that are not investors in one or more of the Funds. Valor may, in its sole discretion, offer co-investment opportunities to some investors in its Funds while not offering them to other investors in its Funds, and may cause some Fund investors and/or other co-investors to bear a management fee and/or carried interest while not imposing a management fee and/or carried interest (or imposing a different management fee or carried interest) on other Fund investors and/or other co-investors. In Valor’s sole discretion, some Co-Investment Funds and/or co-investors may bear all or a portion of certain expenses (e.g., legal and other expenses associated with a portfolio company investment), while other Co-Investment Funds and/or co-investors do not share in such expenses. In certain cases, co- investment opportunities may include opportunities to invest in Fund portfolio companies at a time when there is not a corresponding Fund investment or on different terms than any Fund investment. please register to get more info

Unless otherwise noted, all strategies and risks listed in Item 8 are generally applicable for all of Valor’s Funds, although VSV is focused on making early-stage food, food technology, and retail technology investments, the Co-Investment Funds were each created to invest in a single portfolio company, and Valor R&D focuses on making VC Investments and therefore they have different investment objectives and risk profiles than the Growth Funds. The Growth Funds focus principally on equity and equity-related, control and non-control investments in companies that Valor believes fit its operational growth investment strategy. For the Growth Funds, Valor seeks to identify and select high-growth, durable companies where the transition to a technology-enabled economy is an important growth driver. In selecting companies in which to invest, the Growth Funds focus on companies that Valor believes have achieved an inflection point in their ability to scale and are well positioned to continue to achieve their market, revenue, and operating goals (“Growth Companies”), although it opportunistically invests in certain earlier stage companies. VSV is focused on making early-stage food, food technology, and retail technology investments. Valor believes its continued ability to add value to companies through the use of its operations team, tools, and experience differentiates Valor significantly. Valor leverages its investment and internal operating capabilities to deliver value through market cycles from differentiated deal sourcing and tangible operating improvements. Valor generally does not use financial engineering or significant leverage to achieve investment returns. Rather, returns are principally achieved through growth in revenue, operating income, and returns on invested capital at Valor’s portfolio companies. Valor believes its team, combining extensive experience as entrepreneurs, operators, and investors, is well qualified to execute its investment strategy. Valor utilizes its systematic and relationship-driven deal generation process to yield a substantial number of compelling investment opportunities. Valor accesses differentiated and proprietary deal flow by capitalizing on important attributes of Valor. Valor has deep relationships with prominent industry executives and investment firms. Valor also maintains targeted dialogues with intermediaries who are experts in Valor’s consumer, manufacturing, and services focus sectors. Valor uses its in-house research capacity, tested deal screening and diligence processes, and unique operational viewpoint to select only what Valor considers to be the best opportunities for investment. Valor’s senior professionals have successful entrepreneurial backgrounds established prior to joining Valor, and these form a core element of the foundation of Valor’s culture, investment strategy, and unique mindset of viewing its portfolio companies as its “customers.” As empathetic fellow operators, through its underwriting process, Valor’s team develops a bond with managers in order to build alignment. This alignment process is critical to ensuring that Valor can have a realizable and incremental impact on a company’s ability to achieve its goals. With portfolio company CEOs frequently serving as excellent reference customers to help Valor capture new investments, the cycle of Valor’s operational growth investment model continues.
Operational Value-Add
Companies choose Valor as a partner to, among other things, benefit from Valor’s experience and expertise in helping scale the business infrastructure, systems, and processes of companies. Having run high-growth businesses themselves, senior members of Valor’s team have what they consider to be a unique empathetic viewpoint that builds credibility and enhances the partnership dynamic with entrepreneurs in Valor’s portfolio. Valor believes that this entrepreneurial and operating experience, together with the expertise gained from subsequent investments, form the foundation of Valor’s operating tools and the expertise used by Valor today. Valor defines its portfolio companies as its “customers” and has designed its operational improvement products to support Valor’s investments through critical scale inflection points. Valor has three core operational products focused on scaling a company’s business infrastructure, including growth, business process lean, and data science. These tools are deployed in a variety of applications depending upon the needs of the company and the requirements of the business model. Valor also engages its team in special situations projects, such as fulfilling interim management positions, under certain circumstances. Valor’s operational products are designed to help companies scale while lowering execution risk. Valor partners with proven and talented executives that are deploying, or seeking to deploy, applied technology to fundamentally improve their product, service, and/or productivity. Valor works closely with a company’s management team prior to closing an investment to accurately identify its constraints to achieving scale. Valor communicates, with what it views as full transparency, ways in which Valor’s operational products can address and solve for these constraints.
Differentiated Investments
Valor’s investment selection is highly targeted and focused with the goal of generating opportunities with asymmetric risk profiles to construct a balanced portfolio across investment stages and sectors. Valor seeks to identify potential investments offering substantial upside opportunities where the risk of loss can be mitigated through Valor’s operating team, tools, and investment structure. To achieve this objective, Valor has constructed an asset selection methodology, based on decades of experience and success, to identify and screen investments in durable companies. While Valor’s method of finding such companies is well established and effective, Valor considers its ability to capture and close on highly sought-after investments as an equally critical competency. Frequently, well before an investment opportunity becomes available, Valor’s team develops a relationship with the company and its management, highlighting Valor’s skills and value-added proposition. It is customary for Valor to develop a dialogue with an entrepreneur over an extended period of time as it considers and evaluates an investment opportunity. Valor’s in-house research team typically first works to uncover attractive markets within Valor’s focus sectors that are being, or that can be, disrupted through the application of technology. Valor then accesses its robust network to obtain investment ideas for Valor, including seeking direct referrals from earlier stage investors and industry executives, as well as engaging intermediaries with expertise in a selected market. Valor thereafter generally spends a substantial amount of time, sometimes measured in years, seeking out, and building relationships with, entrepreneurs and companies before it invests in a market. This commitment of time is important to Valor’s ability to identify and create investment opportunities offering an asymmetric risk profile. It also allows for the development of both empathy and alignment between the Valor team and the entrepreneur. Valor targets companies whose growth is being driven by the transition to the technology-enabled economy. Valor seeks investments in companies that have achieved an inflection point in their ability to scale and can benefit from Valor’s operational support to enhance their infrastructure in growth, business process lean, and/or data science. Valor’s operational resources impact the companies’ ability to scale, improving upside returns and mitigating downside risk. These companies include Growth Companies with traditional products and services, seeking to apply technologically enabled tools to accelerate growth, as well as Growth Companies with technologically driven products, requiring solutions for traditional business challenges such as supply chain management and the development of sales infrastructures. Valor’s network is broad and geographically distributed, with members of Valor cultivating relationships across the West Coast, Mountain West, Midwest, and East Coast, as well as outside the U.S. Valor also focuses on diversifying its deal flow across sourcing channels to avoid concentration and potential misalignment of risk. Valor has had great success sourcing deals from its proprietary network. Leveraging the experience and skills of Valor’s senior team, comprised of former operating executives and entrepreneurs, Valor builds targeted dialogues with management teams that lead to greater understanding of goals, objectives, and strategy. Valor’s investment of time and resources to create this understanding differentiates Valor as it cultivates relationships with entrepreneurs. Through the dialogue, the Valor team credibly illustrates how its tools, expertise, and resources enhance post- closing value creation. This positions Valor to successfully capture and close investments. Valor believes that companies will continue to choose Valor due to its reputation in the market as a value- added partner and the unique professional experiences its team brings to company boards and strategic decision making.
Risk Factors
No investment is free of risk. Current and prospective Valor investors are cautioned that investments in the Funds involve risk of loss, including the possibility of a complete loss of the amount invested, and that they should be prepared to bear those risks. All investors should be aware of certain risk factors, which include, but are not limited to, those outline below. Valor encourages prospective and existing investors to review an applicable Fund’s Governing Documents for additional information. In addition to the risks described below, investors should note that since VSV is focused on making early stage food, food technology, and retail technology investments, its portfolio will likely be less diversified, its performance will likely be more closely tied to the performance of a few industries or sectors, and it may be more volatile, as compared to a fund with a broader mandate. Similarly, the Co-Investment Funds were each formed to invest in a single portfolio company so their performance will depend solely on the performance of that company. Reliance on the General Partner and Advisor. Valor and its affiliates have exclusive responsibility for the Funds’ activities, and, other than as may be set forth in the Governing Document, investors will not be able to make investment or any other decisions in the management of the Funds (although a Fund’s Advisory Board (if any) will have a role in reviewing and/or approving certain matters as more fully set forth in the Governing Document). Investors have no rights or powers to take part in the management of the Funds or make investment decisions and will not receive the amount of any portfolio company’s financial information that is generally available to Valor. Valor will generally have sole and absolute discretion in structuring, negotiating and purchasing, financing, and eventually divesting investments on behalf of the Funds (subject to specified exceptions). The success of the Funds will depend on the ability of Valor’s investment team to identify suitable investments, to negotiate and arrange the closing of appropriate transactions, and to arrange the timely disposition of portfolio investments. Valor’s investment team and other professionals or entities that are themselves members or partners of the General Partner and/or the Advisor are subject to change, withdrawal and/or departure, including as more fully discussed herein. Valor may be unable to find a sufficient number of suitable attractive opportunities to meet the Funds’ investment objectives. No person should purchase an interest unless such person is willing to entrust all aspects of the management of the Funds to Valor. Risk of Limited Number of Investments; Dependence on Performance of Certain Investments. The Funds are expected to participate in a limited number of investments and, as a consequence, the aggregate return of the Funds may be substantially adversely affected by the unfavorable performance of any single investment. Moreover, since not all of the Funds’ investments can reasonably be expected to perform well or even return capital, for the Funds to achieve above-average returns, one or a few of its investments must perform very well. There can be no assurance that this will be the case. In addition, investors have no assurance as to the degree of diversification of the Funds’ portfolio investments, either by geographic region or asset type. To the extent the Funds concentrate investments in a particular issuer, sub-sector, security, or geographic region, its investments will become more susceptible to fluctuations in value resulting from adverse economic to business conditions with respect thereto. Highly Competitive Market for Investment Opportunities. The activity of identifying, completing, and realizing attractive investments that fall within the Funds’ investment objective is highly competitive and involves a high degree of uncertainty. The availability of investment opportunities generally will be subject to market conditions. The Funds will be competing for investments with other private investment vehicles, as well as individuals, companies, financial institutions, sovereign wealth funds and other investors. Further, over the past several years, an ever-increasing number of private equity funds have been or are being formed (and many such existing funds have grown in size). Additional funds with similar investment objectives may be formed in the future by other unrelated parties. It is possible that competition for appropriate investment opportunities may increase, which may also require the Funds to participate in auctions, the outcome of which cannot be guaranteed, thus possibly reducing the number of investment opportunities available to the Funds and potentially adversely affecting the terms upon which investments can be made. Participation in auctions also increases the pressure on the Funds with respect to pricing of a transaction. Moreover, the Funds will incur due diligence costs, bidding costs, or other expenses on potential investments that may not be successful. As a result, a Fund may not recover all of its costs, which would adversely affect returns. Additionally, competition for investment opportunities from other investment vehicles has increased on a global scale. Private equity and other funds are making global competition increasingly intense. There can be no assurance that the Funds will be able to locate, complete, and exit investments that satisfy the Funds’ investment objective, or realize upon their values, or that it will be able to invest substantially all its committed capital.

European Union Alternative Investment Fund Managers Directive. The European Union Alternative Investment Fund Managers Directive (the “Directive”) was required to be transposed into the laws of the Member States of the European Union and subsequently incorporated into the European Economic Area Agreement by July 22, 2013. The Directive imposes requirements on non-European Economic Area (“EEA”) investment fund managers (“AIFMs”) which market alternative investment funds (“AIFs”) to professional investors within the EEA. In particular, if a Fund is marketed in the EEA domestic laws implementing the Directive will require additional disclosure and reporting in relation to a Fund and its investments, compliance with which will involve additional costs, as well as restrictions on certain early distributions or reductions in capital in respect of EEA portfolio companies (the so-called “asset stripping” rules) which will result in additional costs and will limit the use of certain investment and realization strategies (such as dividend recapitalization and reorganization) which do not apply to non-AIF/AIFM competitors not subject to the Directive, thereby potentially placing a Fund at a disadvantage to such competitors. EEA home state regulators will also charge initial and/or periodic registration fees for registering a Fund for marketing to professional investors within their jurisdiction. More generally, implementation of the Directive could expose Valor or a Fund to conflicting regulatory requirements in the United States and the EEA. In the future, it may be possible for non-EEA AIFMs to market an AIF within the EEA pursuant to a pan-European marketing “passport” instead of under national private placement regimes, provided that the AIFM complies with all relevant provisions of the Directive including, among other things, rules relating to the remuneration of certain personnel, minimum regulatory capital requirements, restrictions on the use of leverage, additional disclosure and reporting requirements to both investors and EEA home state regulators, the independent valuation of an AIF’s assets and the appointment of legal representatives and an independent depository to hold assets. Certain EEA Member States have indicated that they will cease to operate national private placement regimes when or shortly after the passport becomes available, which would mean that non-EEA AIFMs to whom the passport is available would be required to comply with all relevant provisions of the Directive in order to market to professional investors in those jurisdictions. As a result, if in the future non-EEA AIFMs may only market in certain EEA jurisdictions pursuant to a passport, Valor may not seek to market interests in a Fund in those jurisdictions, which may lead to a reduction in the overall amount of capital invested in a Fund. Alternatively, if Valor sought to comply with the requirements needed to use the passport, this could have other adverse effects including, among other things, increasing the regulatory burden and costs of operating and managing a Fund and its investments, and potentially requiring changes to compensation structures for key personnel, thereby affecting Valor’s ability to recruit and retain these personnel.

A Fund will bear the costs and expenses of compliance with the Directive and any related regulations, including, for example, costs and expenses of collecting and calculating data, the appointment of depositaries and/or the preparation of any notices, filings, periodic reports and/or other materials as may be required in relation to any EEA Member States.

Economic and Market Conditions; Uncertain Economic, Social and Political Environment. The success of a Fund’s investment activities will be affected by general economic and market conditions, as well as by changes in applicable laws, trade barriers, currency exchange controls, and national and international political and socioeconomic circumstances in respect of the countries in which a Fund may invest. The global economic and political climate can be uncertain. For example, the impact of developments such as the June 23, 2016, referendum held by the United Kingdom (the “UK”) on whether to remain a member state of the European Union (“EU”), in which voters favored the UK’s withdrawal from the EU, are unknown. At this time, it is difficult to predict precisely how the UK’s withdrawal from the EU will be implemented and what the economic, tax, fiscal, legal, regulatory and other implications will be for the private investment funds industry and the broader European and global financial and real estate markets generally and for a Fund and its investments specifically. Prior acts of terrorism, the threat of additional terrorist strikes and the fear of a prolonged global conflict have exacerbated volatility in the financial markets and can cause consumer, corporate and financial confidence to weaken, increasing the risk of a “self-reinforcing” economic downturn. The availability of credit for businesses, including credit used to acquire businesses, may be restricted. Valor could also be affected by difficult conditions in the capital markets and any overall weakening of the financial services industry. A climate of uncertainty may reduce the availability of potential investment opportunities and increases the difficulty of modeling market conditions, potentially reducing the accuracy of financial projections. These factors affect the level and volatility of securities prices and the liquidity of a Fund’s investments, which could impair a Fund’s profitability or result in losses. In addition, general fluctuations in the market prices of securities and interest rates affect a Fund’s investment opportunities and the value of a Fund’s investments. In addition, as private fund firms and other alternative asset managers become more influential participants in the U.S. and global financial markets and economy generally, the private fund industry has been subject to criticism by some politicians, regulators, and market commentators. This increased political and regulatory scrutiny of the private equity industry was particularly acute during the most recent global financial crisis. There is therefore a material risk that regulatory agencies in the U.S., Europe, or elsewhere may adopt burdensome laws (including tax laws) or regulations, or changes in law or regulation, or in the interpretation or enforcement thereof, which are specifically targeted at the private equity industry, or other changes that could adversely affect private equity firms and the funds they sponsor, including a Fund. Various federal, state, and local agencies have also been examining the role of placement agents, finders, and other similar private equity service providers in the context of investments by public pension plans and other similar entities, including investigations and requests for information. As a related matter, Valor may be required to provide certain information regarding some of the investors in a Fund to regulatory agencies and bodies in order to comply with applicable laws and regulations, including the U.S. Foreign Corrupt Practices Act.

Furthermore, in addition to the risks regarding regulatory approvals, it should be noted that government counterparties or agencies may have the discretion to change or increase regulation of a portfolio company’s operations, or implement laws or regulations affecting the portfolio company’s operations, separate from any contractual rights it may have. A portfolio company also could be materially and adversely affected as a result of statutory or regulatory changes or judicial or administrative interpretations of existing laws and regulations that impose more comprehensive or stringent requirements on such company. Governments have considerable discretion in implementing regulations, including, for example, the possible imposition or increase of taxes on income earned by or from a portfolio company or gains recognized by a Fund on its investment in such portfolio company, that could impact a portfolio company’s business. Investments in Highly Levered Portfolio Companies; Use of Leverage. Valor has historically used varying amounts of leverage, as investments in leveraged companies offer the opportunity for capital appreciation. Such investments, however, involve a higher degree of risk. The Funds’ investments involve varying degrees of leverage, as a result of which recessions, operating problems, and other general business and economic risks (as well as particular risks associated with investing in technology companies described below) may have a more pronounced effect on the profitability or survival of such companies. Moreover, any rise in interest rates may significantly increase a portfolio company’s interest expense, causing losses and/or the inability to service debt levels. If a portfolio company cannot generate adequate cash flow to meet debt obligations, the Funds may suffer a partial or total loss of capital invested in the portfolio company. In certain situations, more than one investment purchased by a Fund with the use of leverage may be held with the same bank, custodian or dealer. In such instances, these multiple leveraged investments may be linked and used to “cross-collateralize” the borrowings of the Funds. In the event that such investments are “cross-collateralized”, the Funds could experience concurrent liquidation on multiple investments to satisfy its borrowing obligations, and an adverse event or condition at or with respect to one portfolio investment could negatively affect and/or cause a loss of a different investment that would not otherwise be subject to such adverse event or condition. To the extent the entities or parties entering into a joint or cross- collateralized borrowing arrangement are portfolio companies or entities holding investments (and not the Funds itself), such borrowings will not be subject to the limits on borrowings by the Funds that are set forth in the Governing Document. The securities in which the Funds invests may be among the most junior in a portfolio company’s capital structure and, thus, subject to the greatest risk of loss. Generally, there will, in the case of equity investments, be no collateral to protect an investment once made. Illiquid and Long Term Investments. It is anticipated that there will be a significant period of time before the more recent Funds will have completed making investments in portfolio companies. Such investments may take a number of years from the date of initial investment to reach a state of maturity, when realization of the investment can be achieved. Transaction structures typically will not provide for liquidity of the Funds’ investment prior to that time. Often, there will be no readily available market for investments made by the Funds. Disposition of such investments may require a lengthy time period or may result in distributions in kind to investors. In most cases, there will be no public market for the securities held by the Funds at the time of their acquisition. The Funds will generally not be able to sell its securities publicly unless their sale is registered under applicable securities laws, or unless an exemption from such registration requirements is available. In addition, the Funds likely will be prohibited by contract or other limitation in some cases from selling a portfolio company’s securities or other instruments for a period of time (e.g., due to limitations on sale arising from contractual lockups, obligations to receive consent to transfer or assign interests, or rights of first offer), and as a result will not be permitted to sell a portfolio investment at a time it might otherwise desire to do so. To the extent that there is no liquid trading market for an investment, the Funds may be unable to liquidate that investment or may be unable to do so at a profit. Moreover, there can be no assurances that private purchasers for the Funds’ portfolio investments will be found. Upon dissolution of the Funds or as otherwise provided in the Governing Documents, securities or instruments may be distributed in-kind so that investors may then become minority shareholders in a number of unlisted companies (and as a consequence be unable to protect their interests effectively). There can be no assurance that investors will be able to dispose of such securities or instruments or that the fair market value of such securities or instruments determined by a Fund for purposes of the determination of distributions and the calculation of Valor’s carried interest ultimately will be realized. In addition, if a Fund receives distributions in-kind from any investment, it may incur additional costs and risks in connection with the disposition of such assets. Non-U.S. Investments. A Fund may invest in portfolio companies that are organized or headquartered or have substantial sales or operations outside of the U.S. Non-U.S. securities involve certain risk factors not typically associated with investing in U.S. securities, including risks relating to (i) currency exchange matters; (ii) exposure to fluctuations in interest rates payable with respect to the instruments in which a Fund invests; (iii) differences in conventions relating to documentation, settlement, corporate actions, stakeholder rights and other matters; (iv) differences between the U.S. and foreign securities markets, including potential price volatility in and relative liquidity of some foreign securities markets, the absence of uniform accounting, auditing, and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; (v) differences in the legal and regulatory environment or enhanced legal and regulatory compliance; (vi) certain economic, social, and political risks, including potential exchange control regulations and restrictions on foreign investment and repatriation of capital, political hostility to investments by foreign or private equity investors, the risks of political, economic, or social instability, including the risk of sovereign defaults, and the possibility of expropriation or confiscatory taxation; (vii) the possible imposition of foreign taxes on income and gains recognized with respect to such securities; (viii) less developed corporate laws regarding creditors’ rights, fiduciary duties and the protection of investors; and (ix) less publicly available information. Non-Controlling Investments and/or Investments with Third Parties in Joint Ventures and Other Entities. The Funds can be expected to hold non-controlling interests in many of its portfolio companies and, therefore, may have no right to appoint a director and a limited ability to protect its interests in such companies and to influence such companies’ management. Similarly, the Funds may co-invest with third parties through joint ventures or other entities, thereby acquiring non-controlling interests in certain investments. In such cases, the Funds will be significantly reliant on the existing management and board of directors of such companies, which may include representation of other financial investors with whom the Funds are not affiliated and whose interests may conflict with the interests of the Funds. Moreover, in the case where the Funds may co-invest, such investments may involve risks not present in investments where a third party is not involved, including the possibility that a third-party partner or co-venturer may have financial difficulties resulting in a negative impact on such investment, may have economic or business interests or goals which are inconsistent with those of the Funds, or may be in a position to take action contrary to the Funds’ investment objectives. In addition, the Funds may in certain circumstances be liable for the actions of its third-party partners or co- venturers. Investments made with third parties in joint ventures or other entities also may involve carried interests and/or other fees payable to such third-party partners or co-venturers. However, the Funds generally expect that appropriate minority shareholder rights will be obtained to protect its interests to the extent possible. There can be no assurance that such minority shareholder rights will be available or that such rights will provide sufficient protection of the Funds’ interests. Investments in Public Companies. The Funds’ investment portfolio may contain securities or instruments issued by publicly held companies. Such portfolio investments will subject the Funds to risks that differ in type or degree from those involved with portfolio investments in privately held companies. Such risks include, without limitation, greater volatility in the valuation of such companies, increased obligations to disclose information regarding such companies, limitations on the ability of the Funds to dispose of such securities or instruments at certain times, increased likelihood of shareholder litigation against such companies’ board members, and increased costs associated with each of the aforementioned risks. Investments in Less Established Companies. The Funds expects to make portfolio investments primarily in growth-oriented companies that have inherently greater risk than more established businesses. To the extent there is any public market for the securities held by the Funds, such securities generally are subject to more abrupt and erratic market price movements than those of larger, more established companies. Growth-oriented companies tend to have lower capitalizations and fewer resources and, therefore, often are more vulnerable to financial failure. Oftentimes, such companies also have shorter operating histories on which to judge future performance and in many cases, if operating, will have negative cash flow. Certain growth-oriented companies may not have significant or any operating revenues, and any such investment should be considered highly speculative and may result in the loss of the Funds’ entire investment therein. In addition, less mature companies could be deemed to be more susceptible to irregular accounting or other fraudulent practices. In the event of fraud by any company in which the Funds invests, the Funds may suffer a partial or total loss of capital invested in that company. The foregoing factors also increase the difficulty of valuing such investments. There can be no assurance that any such losses will be offset by gains (if any) realized on the Funds’ other investments. Concentration of Investments in the Technology Sector. It is likely that the Funds’ portfolio companies will be in or closely connected to the technology sector. Concentration in a single industry involves risks greater than those generally associated with diversified acquisition funds, including significant fluctuations in returns. The technology sector is challenged by various factors, including rapidly changing market conditions and/or participants, new competing products, services and/or improvements in existing products. The Funds’ portfolio companies will compete in this volatile environment. There is no assurance that products or services sold by the portfolio companies will not be rendered obsolete or adversely affected by competing products and services or that the portfolio companies will not be adversely affected by other challenges. Instability, fluctuation, or an overall decline within the technology sector will likely not be balanced by investments in other industries not so affected as the Funds’ investments are concentrated in the technology, technology- enabled, and related growth sectors. In the event that the technology sector as a whole declines, returns to investors will likely decrease. Concentration of Investments in the Food and Retail Sectors. VSV’s investments are expected be made primarily in companies that are planning to provide, directly or indirectly, products, services and/or technology relating to food and retail. Concentration in a few, targeted industries involves risks greater than those generally associated with diversified acquisition funds, including significant fluctuations in returns. The food and retail products, services and technology sectors are challenged by various factors, including rapidly changing market conditions and/or participants, new competing products, services and/or improvements in existing products. VSV’s companies will compete in this volatile environment. There is no assurance that products or services sold by the companies will not be rendered obsolete or adversely affected by competing products and services or that the companies will not be adversely affected by other challenges. Instability, fluctuation, or an overall decline within the food and retail products, services and technology sectors will likely not be balanced by investments in other industries not so affected as VSV’s investments are concentrated in the food and retail products, services and technology. In the event that the food and retail sectors as a whole decline, returns to investors will likely decrease. Additional Capital. Certain of the Funds’ portfolio companies, especially those in a development or “platform” phase, may be expected to require additional financing to satisfy their working capital requirements or business development strategies. The amount of such additional financing needed will depend upon the maturity and objectives of the particular portfolio company. Each such round of financing (whether from the Funds or other investors) is typically intended to provide a portfolio company with enough capital to reach the next major corporate milestone. If the funds provided are not sufficient, a portfolio company may have to raise additional capital at a price unfavorable to the existing investors, including the Funds. The Funds may make additional debt and equity investments or exercise warrants, options, or convertible securities that were acquired in the initial investment in such company in order to preserve the Funds’ proportionate ownership when a subsequent financing is planned, or to protect the Funds’ investment when such portfolio company’s performance does not meet expectations. There is no assurance that the Funds will make follow-on investments or that the Funds will have sufficient funds to make all or any of such investments. To the extent a portfolio company in which a Fund has invested receives additional funding in subsequent financings and a Fund does not participate in such additional financing rounds, the interests of the Fund in such portfolio company would be diluted. The availability of capital is generally a function of market conditions that are beyond the control of the Funds or any portfolio company. There can be no assurance that the portfolio companies will be able to predict accurately the future capital requirements necessary for success or that additional funds will be available from any source. In the case of investments involving a “platform company”, the Funds will enter into an arrangement with one or more individuals (who may have experience or capability in sourcing and/or managing investments) to undertake a build-up strategy to acquire and develop assets and business in a particular sector or involving a particular strategy. The counterpart individuals may be compensated with a salary and/or equity incentive plan. In such circumstances, the Funds would initially invest capital to fund a portion of the overhead (including rent, salary or retainers for the counterpart individuals) and sourcing costs for initial investments by the platform. Although the General Partner and its affiliates are generally responsible under the Governing Document for certain overhead expenses associated with sourcing and managing investments, as well as compensation costs of investment professionals, the Funds (and indirectly investors, and not solely the General Partner and its affiliates) will bear the cost of overhead and the sourcing of investments, as well as compensation for the related counterparties, for these platform companies. Investments in Bridge Financings. From time to time, the Funds may lend to portfolio companies on a short-term, unsecured basis or otherwise invest on an interim basis in portfolio companies in anticipation of a future issuance of equity or long-term debt securities or other refinancing or syndication. Such bridge loans would typically be convertible into a more permanent, long-term security; however, for reasons not always in the Funds’ control, such long-term securities issuance or other refinancing or syndication may not occur and such bridge loans and interim investments would remain outstanding. In such event, the interest rate on such loans or the terms of such interim investments would not adequately reflect the risk associated with the position taken by the Funds. Hedging Policies/Risks. In connection with the acquisition, financing, refinancing, or disposition of certain investments, the Funds are likely to employ hedging techniques designed to reduce the risks of adverse movements in interest rates, securities prices, and currency exchange rates. While such transactions may reduce certain risks, such transactions themselves may entail certain other risks. Thus, while the Funds may benefit from the use of these hedging mechanisms, unanticipated changes in interest rates, securities prices, or currency exchange rates may result in a poorer overall performance for the Funds than if it had not entered into such hedging transactions. Reliance on Portfolio Company Management Team. Each portfolio company’s day-to-day operations will be the responsibility of such company’s management team. Although Valor will be responsible for monitoring the performance of each investment, and the Funds seek to invest in companies operated by strong management, there can be no assurance that the existing management team, or any successor, will be able to operate the portfolio company in accordance with the Funds’ plans. The success of each portfolio company depends in substantial part upon the skill and expertise of each portfolio company’s management team. Additionally, portfolio companies will need to attract, retain, and develop executives and members of their management teams. The market for executive talent is, notwithstanding general unemployment levels or developments within a particular industry, extremely competitive. There can be no assurance that portfolio companies will be able to attract, develop, integrate, and retain suitable members of its management team and, as a result, the Funds may be adversely affected thereby. Risk in Managing Portfolio Companies and Effecting Operating Improvements. In some cases, the success of a Fund’s investment strategy will depend, in part, on the ability of a Fund to restructure and effect improvements in the operations of a portfolio company. The activity of identifying and implementing operating improvements at portfolio companies entails a high degree of uncertainty. There can be no assurance that a Fund will be able to successfully identify and implement such improvements. Additionally, to the extent a Fund acquires a control or control oriented interest in a portfolio company, a Fund will be exposed to risks inherent in owning or operating a business. The exercise of control over a portfolio company through a control position, or the service of an officer or employee of Valor and its affiliates as a director of a portfolio company, could (i) expose the assets of a Fund to claims by such portfolio company, its security holders, and creditors or (ii) impose additional risks of liability for environmental damage, product defects, failure to supervise management, violation of governmental regulations, and other types of liability in which the limited liability generally characteristic of business operations may be ignored. If these liabilities were to occur, a Fund, directly, and a Fund’s investors indirectly, could suffer losses. Contingent Liabilities upon Disposition. In connection with the disposition of an investment in a portfolio company, a Fund may be required to make representations about the business, financial affairs and other aspects (such as property, tax, insurance and litigation) of the portfolio company typical of those made in connection with the sale of any business and may be responsible for the content of disclosure documents under applicable securities laws. It may also be required to indemnify the purchasers of such investment or underwriters to the extent that any such representations or disclosure documents turn out to be inaccurate. These arrangements will result in the incurrence of contingent liabilities for which Valor may establish reserves or escrow accounts. In that regard, investors may be required to return amounts distributed to them to fund Fund obligations, including indemnity obligations, subject to certain limitations set forth in a Fund’s Governing Documents and obligations under law. Uncertainty of Estimates and Financial Projections: Estimates or projections of market conditions, commodity prices, and supply and demand dynamics are key factors in evaluating potential investment opportunities. These estimates are subject to wide variances based on changes in underlying commodity prices and technical assumptions. There can be no assurance that projected results will be obtained, and actual results may vary significantly from projections or assumptions. General economic conditions, which are not predictable, may also have a material adverse impact on the reliability of such projections. In addition, the actual condition of the portfolio companies or other elements of a portfolio company may be worse than anticipated, requiring adjustments such as additional capital or maintenance expenditures, which may not be recoverable, allocable to counterparties, or economic from a stand-alone perspective. Risks Relating to Due Diligence of and Conduct at Portfolio Companies. Before making portfolio investments, Valor will typically conduct due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each portfolio investment. Due diligence may entail evaluation of important and complex business, financial, tax, accounting, environmental, and legal issues. Outside consultants, legal advisors, accountants, investment banks, and other third parties may be involved in the due diligence process to varying degrees depending on the type of investment. Such involvement of third party advisers or consultants may present a number of risks primarily relating to Valor’s reduced control of the functions that are outsourced. In addition, if Valor is unable to timely engage third-party providers, its ability to evaluate and acquire more complex targets could be adversely affected. When conducting due diligence and making an assessment regarding an investment, Valor will rely on the resources available to it, including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence investigation that Valor carries out with respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the portfolio investment being successful. There can be no assurance that attempts to provide downside protection with respect to portfolio investments will achieve their desired effect and potential investors should regard an investment in the Funds as being speculative and having a high degree of risk. There can be no assurance that the Funds will be able to detect or prevent irregular accounting, employee misconduct or other fraudulent practices during the due diligence phase or during its efforts to monitor the portfolio investment on an ongoing basis. Conduct occurring at portfolio companies, even activities that occurred prior to the Funds’ investment therein, could have an adverse impact on the Funds. In the event of fraud by any portfolio company or any of its affiliates, the Funds may suffer a partial or total loss of capital invested in that portfolio company. An additional concern is the possibility of material misrepresentation or omission on the part of the portfolio company or the seller. Such inaccuracy or incompleteness may adversely affect the value of the Funds’ securities and/or instruments in such portfolio company. The Funds will rely upon the accuracy and completeness of representations made by portfolio companies and/or their former owners in the due diligence process to the extent reasonable when it makes its investments, but cannot guarantee such accuracy or completeness. Under certain circumstances, payments to the Funds may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance or a preferential payment. Recycling; Reinvestment. Valor has the right to generally recall (or retain) an amount up to the cost basis of any portfolio investment, or any portion thereof, that that has been disposed of within twelve months after the date such portfolio investment was made. Accordingly, during the term of the Funds, an investor may be required to make capital contributions in excess of its commitment. In addition, such reinvestment limits early distributions to investors, and to the extent such recalled or retained amounts are reinvested in portfolio investments, an investor will remain subject to investment and other risks associated with such portfolio investments. As a result, reinvestment increases the risk of investing in the Funds. Valuation of Portfolio Investments and Interests. There is no established market for the interests or for securities held by the Funds and there may not be any comparable companies for which public market valuations exist. Because there is significant uncertainty as to the valuation of illiquid investments, the values of such investments may not necessarily reflect the values that could actually be realized by the Funds. Under certain conditions the Funds may be forced to sell portfolio investments at lower prices than it had expected to realize or defer—potentially for a considerable period of time—sales that it had planned to make. In addition, under limited circumstances, Valor may not have access to all material information relevant to a valuation analysis with respect to a portfolio investment. As a result, the valuation of the Funds’ portfolio investments, and as a result the valuation of the interests themselves, may be based on imperfect information and is subject to inherent uncertainties. Valuations will generally not be audited or verified by any third party service provider. Indemnification. A Fund will be required to indemnify Valor and its affiliates, agents, advisers, and, if applicable, Advisory Board members for liabilities incurred in connection with the affairs of a Fund. Additionally, such parties will be entitled to exculpation by a Fund. Such liabilities may be material and have an adverse effect on the returns to the investors. The indemnification obligation of a Fund would be payable from the assets of a Fund, including the unfunded capital commitments of the investors. If the assets of a Fund are insufficient, Valor may recall distributions previously made to the investors, subject to certain limitations in the Governing Documents. It should be noted that Valor may cause a Fund to purchase insurance for a Fund, Valor, and Valor’s affiliates, agents, and representatives, but there can be no assurance that such insurance will cover any or all liabilities. Moreover, in its capacity as general partner of a Fund, Valor will, notwithstanding any actual or perceived conflict of interest, be the beneficiary of any decision by it to provide indemnification (including advancement of expenses). Deployment of Capital. In light of a Fund’s investment strategy and the need to be able to deploy capital quickly to capitalize on potential investment opportunities, a Fund may from time to time maintain cash at the fund level pending deployment into investments, which could at times be significant. In the event a Fund were unable to find suitable investments such cash may be maintained at the fund level for longer periods which would be dilutive to overall investment returns. In addition, a Fund may fund investments using proceeds derived through fund-level borrowings (e.g., a secured subscription credit facility) on a long-term basis and/or in advance of calling capital from investors, which may be on a joint, several, joint and several or cross-collateralized basis or otherwise with parallel funds and/or other Funds. The costs and expenses of any such borrowings will generally be allocated among a Fund, such parallel funds and such other Funds pro rata (and to investors pro rata), which will increase the expenses borne by investors and would be expected to diminish net investment returns. Limited Access to Information. Investors’ rights to information regarding the Funds will be specified, and strictly limited, in the Governing Document. In particular, it is anticipated that Valor will obtain certain types of material information from portfolio investments that will not be disclosed to investors because such disclosure is prohibited for contractual, legal, or similar obligations outside of Valor’s control. Decisions by Valor to withhold information may have adverse consequences for investors in a variety of circumstances. For example, an investor that seeks to transfer its interests may have difficulty in determining an appropriate price for such interests. Decisions to withhold information also may make it difficult for investor to monitor Valor and its performance. Additionally, it is expected that investors who designate representatives to participate on a Fund’s Advisory Board will, by virtue of such participation, have more information about the Fund and portfolio investments in certain circumstances than other investors generally and will be disseminated information in advance of communication to other investors generally. Amendments; Side Letters. Fund Governing Document may be amended from time to time generally with the consent of the relevant Fund General Partner and a majority in interest of the investors, subject to certain exceptions set forth in the Governing Document. Under certain circumstances, failure to object or respond to a proposed amendment within certain time periods specified in the Governing Document may be deemed consent. The Governing Documents for each Fund sets forth certain other procedures for its amendment, including provisions allowing the General Partner to amend the Governing Document without the consent of the investors in certain circumstances. Valor may enter into a Side Letter or other similar agreement with a particular investor with respect to the Funds without the approval or vote of any other investor, which would have the effect of establishing rights under, altering or supplementing the terms of the Governing Document or the subscription agreement related thereto with respect to such investor in a manner more favorable to such investor than those applicable to other investors. Any rights established, or any terms of the Governing Document or any subscription agreement related thereto, altered or supplemented in a Side Letter or other similar agreement with an investor will govern solely with respect to such investor notwithstanding any other provision of the Governing Document or any subscription agreement related thereto. Such rights or terms in any such Side Letter may include, without limitation: (i) excuse rights applicable to particular investments (the exercise of which will increase the percentage interest of other investors in, and contribution obligations of other investors with respect to, such investments); (ii) certain information rights or reporting obligations of Valor; (iii) co-investment rights; (iv) certain transfer rights; or (v) rights or terms necessary in light of particular legal, tax, regulatory, or public policy characteristics of an investor (including withdrawal rights in respect of political contribution, gift and other similar policies or restrictions established by investors affiliated with a government entity or agency). Funds Expenses. Expenses to be borne by the Funds will reduce the actual returns realized by investors on their investment in the Funds (and may, in certain circumstances, reduce the amount of capital available to be deployed by the Funds in investments). Funds expenses include recurring and regular items, as well as extraordinary expenses for which it may be hard to budget or forecast. As a result, the amount of Funds expenses ultimately called or called at any one time may exceed amounts expected or budgeted by Valor and/or investors of the Funds. From time to time, the General Partner will be required to decide whether costs and expenses are to be borne by a Fund, on the one hand, or a General Partner, Valor and/or other Funds, on the other, and/or whether certain costs and expenses should be allocated between or among the Funds, on the one hand, and other Funds, on the other. Certain expenses may be suitable for only the Funds, a particular parallel vehicle or a participating other Fund and borne only by such Fund, or, as is more often the case, expenses may be allocated pro rata among each participating other Fund and the Funds and all parallel vehicles even if the expenses relate only to particular vehicle(s) and/or investor(s) therein. Valor will make such judgments in its good faith discretion, notwithstanding its interest in the outcome, and may make corrective allocations after the fact should it determine that such corrections are necessary or advisable. Cyber Security Breaches and Identity Theft. Valor, its affiliates, the Funds, their service providers and other market participants increasingly depend on complex information technology and communications systems to conduct business functions. These information and technology systems are subject to a number of different threats or risks that could adversely affect the Funds and its investors, despite the efforts of Valor, its affiliates and the Funds’ service providers to adopt technologies, processes and practices intended to mitigate these risks and protect the security of their computer systems, software, networks and other technology assets, as well as the confidentiality, integrity and availability of information belonging to the Funds and its investors. For example, these systems are subject to damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches, usage errors by their respective professionals, power outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes. Third parties may also attempt to fraudulently induce employees, customers, third-party service providers or other users of Valor’s systems to disclose sensitive information in order to gain access to Valor’s data or that of the Funds’ investors. Although Valor will implement various measures to manage risks relating to these types of events, if these systems are compromised, become inoperable for extended periods of time or cease to function properly, Valor, the Funds and/or a service provider thereof would have to make a significant investment to fix or replace them. The successful penetration or circumvention of the security of these systems, or a failure of these systems and/or of disaster recovery plans for any reason could cause significant interruptions Valor’s, the Funds’ and/or a service provider’s operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to investors (and the beneficial owners of investors), the inability to access electronic systems, loss or theft of proprietary information or corporate data, physical damage to a computer or network system and costs associates with system repairs. Such a failure could harm Valor’s, the Funds’ and/or a service provider’s reputation, subject any such entity and their respective affiliates to legal claims, compliance costs and otherwise affect their business and financial performance. Similar types of operational and technology risks are also present for the portfolio companies, which could have material adverse consequences for such companies, and may cause the Funds’ investments to lose value.
Conflicts of Interest
Portfolio Company Relationships. The Funds’ portfolio companies may be counterparties or participants in agreements, transactions, or other arrangements with portfolio companies of other investment funds managed by Valor or other Valor affiliates that, although Valor determines to be consistent with the requirements of such Funds’ Governing Documents, may not have otherwise been entered into but for the affiliation with Valor, and which may involve fees and/or servicing payments to Valor- affiliated entities that are not subject to the management fee offset provisions described herein. For example, Valor may, like other private equity firms, in the future cause portfolio companies to enter into agreements regarding group procurement, benefits management, data management and/or mining, technology development, purchase of title and/or other insurance policies (which may be pooled across portfolio companies and discounted due to scale) and other similar operational initiatives that may result in fees, commissions or similar payments and/or discounts being paid to Valor or its affiliates, or a portfolio company, including related to a portion of the savings achieved by the portfolio company. In addition, portfolio companies of other Valor investment funds may do business with, support, or have other relationships with competitors of the Funds’ portfolio companies, and in that regard prospective investors should not assume that a company related to or otherwise affiliated with Valor will only take actions that are beneficial to or not opposed to the interests of the Funds and its portfolio companies. For example, it is possible that certain portfolio entities of the other Funds or companies in which the other Funds have an interest will compete with the Funds for one or more investment opportunities. Additionally, Valor may hold equity or other investments in companies or businesses (even if they are not “affiliates” of Valor) that provide services to or otherwise contract with portfolio companies. In connection with such relationships, Valor may also make referrals and/or introductions to portfolio companies (which may result in financial incentives (including additional equity ownership) and/or milestones benefitting Valor that are tied or related to participation by portfolio companies). The Funds and the investors will not share in any fees or economics accruing to Valor as a result of these relationships and/or participation by portfolio companies. Moreover, in connection with seeking financing or refinancing of portfolio companies and their assets, it may be the case that better financing terms are available when more than one portfolio company provides collateral, particularly in circumstances where the assets of each portfolio company are similar in nature. As such, rather than seeking such financing or refinancing on its own, a portfolio company of the Funds may enter into cross collateralization arrangements with another portfolio company of the Funds or portfolio companies of one or more other Funds. While Valor would expect any such financing arrangements to generally be non-recourse to the Funds and the other Fund, as a result of any cross-collateralization, the Funds could also lose its interests in otherwise performing Investments due to poorly performing or non-performing investments of other Funds. Service Providers and Other C please register to get more info