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Comp mechanism · bona-fide-co-gp-carry

Bona-fide co-GP / origination carry for genuine GP work

Carry on realized exit gains, paid to a creator/sourcer who does genuine general-partner work — sourcing, evaluation, negotiation, post-close support. The archetypal quality-supply-and-fill lever for the deal engine, and the mechanism whose safety leans hardest on facts the primary archive does not close.

Weighted total  −8.0 · Rank 12 of 14 · Overall evidence: proxy-used
Executive summary

Bona-fide co-GP / origination carry pays a creator a share of realized exit gains for doing genuine general-partner work — sourcing deals, evaluating and negotiating them, and supporting them post-close — rather than for introducing capital. It is the strongest deal-side alignment lever in the menu: it is the 5-anchor for both SPV alignment and SPV conversion, because carry keyed to deal outcomes is precisely what motivates quality supply and allocation fill. But it does nothing for the crown-jewel RIA book (RIA alignment and conversion both 1), it carries the top-of-scale complexity of a five-document external-party GP stack with per-deal carve and 206(3)/206(1)–(2) machinery when RIA clients are routed in, and its legal safety is conditional — clean only if the recipient performs real investment activity; a distributor paid carry is "the unregistered-broker pattern in a costume" that collapses to Ranieri §15(a) status. Headline verdict: a legitimate but heavy capital-mover reserved for genuine GP labor — it ranks 12 of 14 on the default weights (tied with scout carry), sunk not by any single defect but by the compound legal-plus-compliance-plus-complexity penalties that lawful deal-side pay necessarily carries.

Weighted total
−8.0 rank 12 / 14
Hard legal risk
3 conditional-safe, high end
SPV conversion
5 built to fill deals
Overall evidence
Proxy-used no-action letters unarchived

Detailed summary — the nine axes

Each axis is scored 1–5. Every axis name below is a defined term linking to its definition on the methodology page. Grouped into Alignment (does it advance the flywheel), Risk (what it costs to run and carry), and Conversion (does it actually move the needle).

Alignment

SPV alignmentDoes it advance the deal engine / sourcing? 1 = decoupled from deals by design; 5 = paid on realized deal outcomes. 5

Carry on realized exit gains paid to sourcers/co-leads doing genuine GP work is the archetypal quality-supply-and-fill lever — the 5-anchor for SPV alignment (Operating-Plan §6 item 2, §8 waterfall).

RIA alignmentDoes it advance wealth AUM / advisory conversion? 1 = aimed at capital not advisory relationships; 5 = paid on advisory clients delivered. 1

Aimed at deal capital and GP economics, not recurring advisory relationships; it does nothing to build bona-fide AUM, so it sits at the ~1 deal-side-carry anchor (Compliance §9, RIA-SPV-Architecture §8).

Combined-entity fitDoes it advance the HoldCo flywheel as one? 1 = needs a BD/CAB build or second adviser; 5 = runs cleanly inside one adviser + MediaCo. 3

Runs inside the recommended one-adviser HoldCo without forcing an affiliated-BD build, but the five-doc external-party carve plus per-deal papering adds real machinery — mid-fit, ~3.

Risk higher = worse

Complexity riskOperational / structural machinery to run. 1 = one-time grant/disclosure only; 5 = build-and-supervise a BD/CAB or multi-doc external GP stack. 5

Five-document external-party stack, per-deal origination/co-GP carve before the house split, plus 206(3)/206(1)–(2) machinery when RIA clients are routed in — the top-of-scale complexity anchor (Compliance §5a; Operating-Plan §14 change 1).

Brand riskPersonal-brand / securities exposure to the creator. 1 = minimal personal exposure; 5 = creator becomes an unregistered broker with bad-actor taint. 3

The creator/sourcer becomes a covered GP/promoter, 506(d)-screened with 17(b)/Marketing-Rule disclosure obligations riding in their own content — but the disclosure-on-every-post firehose attaches to a touting fact pattern, not to a bona-fide co-GP who is not promoting the deal in branded content. Residual is 506(d) covered-promoter screening plus collapse-to-broker-taint if the GP work is not genuine. Corrected 4→3 (Compliance §3f).

Hard legal riskRegistration / Ranieri / Van Eck / 15(a) transaction-based-comp exposure. 1 = no transaction nexus; 5 = the Exchange Act 15(a)/Ranieri violation itself. 3

Safe under the AngelList/FundersClub no-action foundation only if the recipient performs at least two genuine investment activities; a distributor paid carry is "the unregistered-broker pattern in a costume" that collapses to Ranieri §15(a) status — the ~3 conditional-safe anchor (Compliance §3f, §8 item 1).

Compliance burdenRecurring upkeep. 1 = grant-then-passive; 5 = continuous point-of-endorsement disclosure + 506(d) re-screening + adviser/FINRA supervision. 4

Per-deal 506(d) bring-downs plus transaction-by-transaction 206(3) consent and 206(1)–(2) suitability each time an RIA client is allocated into the sleeve — recurring per-deal upkeep at the ~4 band, but not the 5-tier affiliated-BD build (Compliance §5a).

Conversion

Expected RIA conversionHow much it drives creators to deliver advisory clients. 1 = pulls toward capital/deals; 5 = directly incentivizes delivering advisory clients. 1

Pulls toward capital and deals, not advisory relationships, so it grows the RIA book little to none — the ~1 deal-side-carry conversion anchor (Compliance §6).

Expected SPV conversionHow much it drives deal participation. 1 = decoupled from deals by design; 5 = built to move deal capital / fill allocations. 5

One of the two mechanisms actually built to move deal capital and fill allocations — the 5 SPV-conversion anchor (Operating-Plan §4, §8; RIA-SPV-Architecture §8).

Load-bearing precondition — "genuine GP work." Every legal characterization on this mechanism turns on the recipient performing real investment activity (sourcing + evaluation/negotiation/post-close support), not capital introduction. The moment the carry is in substance paid for moving capital, the mechanism stops being co-GP carry and becomes the unregistered-broker anti-pattern under Ranieri §15(a). The score assumes the genuine-work version; verify the facts before relying on it.

Assessment

Under the canonical nine-component weighting — 1·SPVa + 1.5·RIAa + 1·Comb + 2·RIAc + 1·SPVc − 1·Cplx − 1.5·Brand − 3·Legal − 1.5·Burden — the primary-law-verified scores yield a weighted total of −8.0, ranking this mechanism 12 of 14 (tied with scout carry), above only the two placement-commission builds and the unregistered anti-pattern. The math is the framework's central tension made concrete: this is one of only two mechanisms actually built to fill the SPV (SPV alignment 5, SPV conversion 5), yet it sinks under the weights because lawful deal-side pay costs a hard-legal 3 (weight −3), a compliance-burden 4 (weight −1.5), and a complexity 5 (weight −1), while contributing nothing on the heavily weighted RIA-conversion axis (weight 2.0). Filling the SPV lawfully requires paying the registration/diligence cost, and that cost is what pulls the total deep negative.

DRIL evidence — the three legal axes

Each legal score carries a DRIL evidence status recording how well-grounded it is against the archived primary law. The score's number is its risk level; its status is the strength of the law behind it. Overall evidence for this mechanism: proxy-used (the weakest of the three — the AngelList/FundersClub no-action letters that anchor the safety case are not archived primary law).

Hard legal risk = 3
inferred

No archived primary source contains an on-point holding that carry-on-exit-gains for genuine GP labor is safe from §15(a). Ranieri’s verbatim holding governs transaction-based comp on capital raised; the 3 is a reasoned distinction of that fact pattern, not a verbatim holding on GP-labor carry. Rule 3a4-1(a)(2)/(c)(1) are quoted verbatim but cut against safety more than the memo implies. Critically, the calibration also leans on the AngelList/FundersClub no-action foundation — staff guidance, not primary law, and not in the archive: a proxy element embedded in an otherwise inferential score.

Compliance burden = 4
proxy-used

One leg is archived verbatim: per-deal 506(d) bring-downs (§230.506(d)(1) compensated-solicitor covered persons; (d)(2)(iv) reasonable-care factual inquiry). But the other two load-bearing legs — transaction-by-transaction 206(3) consent and documented 206(1)–(2) suitability — have no archived primary source. Advisers Act §206(3) and §206(1)–(2) are not in legal-sources/; §206(1) appears only incidentally inside bad-actor cross-reference lists. Two of the three obligations that justify the 4 rest on unarchived primary law standing in for the verbatim statute.

Brand risk = 3 corrected 4→3
inferred

The 506(d)(1) residual is verbatim-supported, but the actual score (down-corrected from 4) is set by distinguishing Van Eck/17(b): the "disclosure-on-every-post" firehose attaches to a promoter/touting fact pattern, not to a bona-fide co-GP who is "not touting the deal in branded content." No archived source holds that a non-touting co-GP carries exactly brand-risk-3; Van Eck’s verbatim facts concern an undisclosed AUM-linked public promoter, a pattern the rationale reads this mechanism out of by reasoned extension. Sound distinction, not verbatim on-point support.

Audit item — proxy check (two open items). This mechanism’s overall evidence is proxy-used, and there are two distinct proxies to flag for counsel:
  1. Hard-legal safety leans on unarchived no-action letters. The AngelList (2013) and FundersClub (2013) SEC staff no-action letters are the doctrinal foundation for treating bona-fide GP carry as outside transaction-based-comp broker status — but no-action relief is fact-specific and non-precedential, and these letters are not archived primary law. Pull and archive them, or downgrade reliance.
  2. Compliance-burden 4 rests partly on unarchived statute. The 206(3) principal-transaction consent and 206(1)–(2) suitability obligations are not in the primary archive; only the 506(d) diligence leg is verbatim-answered. Archive §206(1)–(3) to close the chain.
Adversarial verdict — one score corrected. Legal scores were not all sound as originally memoed: brand risk was corrected 4→3. Hard legal risk (3) and compliance burden (4) hold. The verify pass emphasizes that Rule 3a4-1 is unavailable to a third-party creator (3a4-1(c)(1) limits the issuer safe harbor to a partner/officer/director/employee of the issuer) and that its (a)(2) transaction-comp threshold bar cuts against safety — so the 3 sits at the high end of the conditional-safe band, not the low end, and would jump toward 5 the moment the recipient is in substance paid for capital introduction. No calibrationNote (co-verification against the original 11-mechanism scoring) is recorded for this mechanism.

Primary legal sources

The primary-law citations the legal scores are graded against (from the adversarial verify pass). Where a source is archived under Sources, the citation links to the hosted file. Two authorities the safety case leans on — the AngelList/FundersClub no-action letters and Advisers Act §206(1)–(3) — are cited but not archived, and are flagged as such below.

Structures this mechanism fits under

Co-GP / origination carry is a deal-side lever: it lives wherever a DealCo / SPV-sponsor side exists and can pay carry through a genuine GP arrangement. It can run inside the one-adviser HoldCo (mid-fit), but the deal-side builds are its natural home.

Structure · S3 · Path B
Separated (WealthCo RIA + DealCo SPV sponsor)

The natural home: the DealCo SPV sponsor side is where GP economics and origination carry sit, cleanly walled off from the WealthCo advisory book.

 Structure · S4 · Path B variant
Separated + affiliated BD / CAB

Where deal-side capital movement is heaviest, the affiliated BD/CAB build supplies the registration cover that keeps transaction-adjacent carry off the Ranieri line.

 Structure · S1
Combined (one adviser + MediaCo)

Runs inside the recommended one-adviser HoldCo without forcing an affiliated-BD build — but the five-doc external-party carve and per-deal papering hold the fit to a mid ~3.