Subject: RSTP Fund Meeting Tomorrow
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Devon Archer" <[email-masked]>
Date: Sun, 17 Jul 2011 19:06:59 -0400

H/D-

I think I emailed some thoughts a week or so ago, but since the three of us may not have a lot of time to talk prior to our meeting tomorrow - my thoughts again.  (Keeping in mind I really like the concept assuming we can agree on the below issues.)

1) No equity in RSP - happy to look at equity in future proprietary products or revenue sharing opportunities for other RSP entities, but truthfully equity in RSP Hold Co means nothing and is worth nothing and we need to all work together a little before even addressing.
2) We need a minimum of 50% of the mgmt fees and carry.  (Instead of 60/40 they are proposing.)  Point being particularly on mgmt fees is that the more we can generate there the more time we can devote.   If you are talking about $50m raised (a little optimistic maybe?) and a 2% mgmt fee (a little high as well), that is $1m of mgmt fees annually and $500K a year to us.  We could talk about some sort of waterfall where they get more sooner, but I think our branding is worth 50%.  (Devon, more I thought about it we never agreed to 50/50 split so argument of Lara's addition and need to dilute equally isn't that strong.)
3) Let's put off discussion of advisory fees/services for portfolio companies and focus solely on the investment side for now.  Getting advisory fees takes away focus, complicates things, is not as easy as it sounds and actually ties our hands in some of the things we are able to do.  Neil has mentioned perhaps charging fees for some of the business set-up services he can provide - we can discuss that (and maybe we give them more than 50% for those services), but don't think we charge for our biz dev types advisory services.  We'll do some of the biz dev work as owners of the portfolio companies - just changes dynamic when we are charging for them.
4) Timeline and Bandwidth need to be discussed - but I like what I heard from John about both.
5) Finally, I'd like to throw out the idea of including some cleantech investments in the fund.  Not sure if John/Lara are able to do due diligence on those or not, but it seems we get a lot of opportunities there and it'd be nice to be able to tap into this pool a little for these assuming the financials/economics work.

Just my thoughts.

See you tomorrow,

Eric

Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
[email-masked]
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