Fund Structure and Allocation

The Pathfinders Fund is designed to support innovative startups through a structured equity distribution and governance model. Below is a detailed overview of the fund's structure:

Equity allocation:

1. Fund Orga & Management (~25%):
   • General partners (GPs): 17.5% equity, distributed among 2 to 3 GPs.
   • Advisors: 7.5% equity, with 2.5% allocated to each of the 3 advisors.
     • We want 2-3 A-List super closely involved advisors → There will be terms to the advisory role
     • Can also include more non-equity advisors
2. Startup Teams (75%)
   • Incubator Batch: The rest of the the equity is evenly distributed among the startup batch in exchange for a small equity stake in their startup (4-5%)
   • (Optional) Alternatively sourced and aligned startups: If the batch size is too small (<5), we would consider actively sourcing and including aligned AIS startups from the Ecosystem at similar conditions to the batch

Illustration:

Founding Team 1 (of n)

Gives 4-5% of their startup equity

Pathfinder Fund

Gives 75% / n of their funds equity

Equity Dynamics and Dilution

• Dilution considerations (Fund Primary Equity): We expect all of the funds equity to be distributed/allocated before fund incorporation, which would eliminate the need for new primary deals from a funds perspective (no dilution).

  In the case that we do want/need to add new startups to the fund after incorporation, there shall be a semi-democratic process:

  • Startups' veto power: Existing startups will have veto power over the addition of new startups.
  • GPs' proposal power: General Partners can propose the inclusion of new startups.
  • Advisors' role: Advisors will not have voting power in this process.

• Pro-Rata: Given the non-monetary nature of the fund, we would expect not to exercise any pro-rata rights in funding rounds from a participating startup. We would probably keep this option open in the Shareholder Agreement, in case we do want to collect LP backing for a pro-rata investment at a much later point in time.

• Drag-Along Rights and Early Drop-out:

• Vesting: There will be a two-sided vesting schedule on a shorter than usual timescale (12-24 months). In addition

Other Considerations

• Portfolio distinction: Investments must be significantly different from each other. While all must align with AI safety, they should not be direct competitors to avoid cannibalism within the fund.

Financing and Fund Management

• Non-investment structure: The fund will operate without traditional monetary investments. Instead, it will rely on non-profit funding.
  • Funding source: The necessary funds (estimated between $100K and $450K) will be sourced from aligned non-profit investors.
  • GPs' compensation: General Partners will receive a low salary, emphasizing a cooperative model over traditional investment structures.

Fund Benefits

The Pathfinders Fund offers numerous benefits to startups, including:

• Incubation support: Access to a robust incubator program for initial startups.
• Advisory services: Guidance from experienced advisors in the field of AI safety.
• Collaborative ecosystem: A supportive environment fostering collaboration without direct competition.