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🏛️ Village Framework

Each Backerville village operates as a legally compliant investment club with specific structural characteristics:
  • Legal Entity: Villages are structured as Limited Liability Companies (LLCs) with pass-through taxation
  • Maximum Size: Capped at 100 members to comply with investment club regulations
  • Narrow Focus: Each village focuses on a specific theme (e.g., Humaniod Robotics, HR Tech, YC S25, Techstars Austin, HF0, etc.)
  • Geographic Scope: Can include employees from multiple companies across geographies
  • Minimum Size: Villages typically require at least 10 members to achieve meaningful diversification

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Regulatory Compliance

Villages are designed to operate within the Investment Company Act exemption under Section 3(c)(1), which requires:
  • Not more than 100 beneficial owners
  • No public offering of securities
  • Operating primarily for the benefit of members

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👥 Membership Eligibility

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Core Requirements

To join a village, members must typically meet certain eligibility criteria:
  • Employment Status: Current employee of a pre-IPO company in the village’s sector or theme
  • Equity Ownership: Must own vested or vesting equity in their company
  • Minimum Contribution: Ability to contribute at least a minimum threshold value (typically $10K worth of equity)
  • Accreditation: No accreditation requirements for members (a key advantage of the investment club structure)

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Member Types

Villages may have different types of members with varying rights and responsibilities:
  • Council Members: Initial members who establish the village and help define its rules and focus
  • Regular Members: Standard participants who join after founding
  • Special Status Members: Members with specific expertise who may have advisory roles

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🔢 Village Units

When members contribute to a village, they receive units representing their ownership stake:
  • Unit Issuance: Units are issued proportionate to the value of the promissory note contributed
  • Valuation Basis: Contribution value is determined based on the last funding round or accepted secondary pricing
  • Rights: Each unit represents a pro-rata claim on all future proceeds received by the village
  • Voting Power: Units typically include voting rights for rebalancing decisions and village governance

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Unit Calculation Example

Example: Sarah contributes a promissory note for $100,000 worth of her startup’s equity to a village with $1,900,000 in total pre-funding contributions. She receives 5% of the village units ($100,000 ÷ $2,000,000).

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🔲 Village Boundaries

To maintain focus and regulatory compliance, villages operate with specific boundaries:
  • Niche Delimitation: Clear definition of which companies qualify for inclusion
  • Contribution Limits: Minimum and maximum contribution allowed from any single member or company
  • Concentration Limits: No single company’s promised equity can exceed 25% of the village’s total portfolio
  • Membership Term: Members can exit any time after an initial 12 months lockup by providing the club with cash equal to the value of their units
  • Membership Fees: Members can defer membership fees to be paid from future earnings at a premium. This allows members to remain part of the village and benefit from potential long-term upside, even if their current equity becomes worthless and they stop participating in village voting.

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⚙️ Village Administration

Every village requires administration to ensure proper functioning:
  • Administrator Role: Backerville serves as the administrator for all villages
  • Record Keeping: Maintaining membership records, contribution values, and unit allocations
  • Compliance Management: Ensuring adherence to investment club regulations
  • Meeting Facilitation: Organizing quarterly voting and general meetings
  • Documentation: Preparing and maintaining all legal documentation

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🔒 Data Privacy & Confidentiality

Villages implement strict protocols to protect member information:
  • Voting Anonymity: Individual votes on company bullishness and admiration are kept anonymous
  • Contribution Privacy: Details of individual contributions are confidential within the village
  • Secure Information Handling: All personal and financial information is handled according to strict security standards
By maintaining this structure, villages provide a framework that balances legal compliance, member protection, and operational flexibility to achieve the goal of equity diversification.