In venture capital, demand registration refers to a mechanism that allows investors in a venture capital fund to request the return of their capital before the end of the fund's life. This is typically done when investors are not satisfied with the performance of the fund and want to withdraw their capital.
Demand registration is a feature that is typically included in the limited partnership agreement (LPA) that governs the terms of the fund. It allows investors to submit a demand for redemption, which the general partner (GP) of the fund must honor within a certain timeframe, usually within 90 days.
Demand registration is an important feature for investors as it gives them more flexibility and control over their investment in the fund. However, it also puts pressure on the GP to deliver strong returns, as investors may redeem their capital if the fund is underperforming.
It's important to note that demand registration may also have a negative impact on the fund's performance, as it can force the GP to liquidate investments at inopportune times and can also create uncertainty for the portfolio companies.