Even though it makes up a small (25%) part of the overall portfolio a lot of the focus is on the VC/PE arm because of the way it operates.
Glaucus claimed that BLA was fee gouging with fees up to 17% on a deal. That would be the Vinomofo example where they charged $3.9m in fees on a $23.9m deal.
The BLA response was
"The Opinion misrepresents Blue Sky's fee structure by aggregating management fees over the life of the fund). It then compares this aggregated fee to an annual management fee apparently charged by other alternative asset managers. There are a number of structural differences between Blue Sky's fee structures and those of other alternative asset managers which the Opinion neglects to consider, including the fact that Blue Sky typically charges fees on invested capital not committed capital"
This is a joke surely.
Firstly, other VC funds create a single fund in which investments go into. Blue Sky sets up a separate fund for each major investment. So, other VC's pay the set-up fee, audit fee, legal fee of the fund once. Blue Sky charged $100k in fund set-up plus $450k in ongoing management fees for this one fund. This is repeated for their other PE/VC investment funds.
Secondly, other VC funds don't charge a capital raising fee for placing the funds.
Thirdly, they certainly don't charge a capital raising fee on funds coming from their own funds that they cornerstone.
Fourthly, other VC funds don't charge an 'M&A fee' for deal origination. In the vinomofo case $800k.
Fifthly, they don't charge $200k in due diligence costs to cover the cost of due diligence (especially if they are charging $800k for deal origination)
Lastly, the funds are still paid by the investor upfront. There is no capital call so it is irrelevant how they ascribed disbursement. The investor has paid the money.
Blue Sky does this fund for every major VC raise it does. So, yes I think this excessive
BLA Price at posting:
$8.47 Sentiment: Sell Disclosure: Not Held
