For more information on Convertible Notes, see Convertible Bonds Best Practices. Other early stage investments include Simple Agreements for Future Equity (SAFEs) and Simple Agreements for Future Tokens (SAFTs). For more information, see Simple Agreement for Future Equity & Tokens Best Practices.

Entity Setup

There is no special entity setup required for Venture Investment trading. However, due to the extremely sporadic nature of pricing, you may want to set the STAR 2 PACE entity flag Value At Cost - No Price Found (11454) = Yes if Venture Investments are the only type held in the fund. This ensures holdings will always be valued in Data Management, even if no market price is available. Please consider the implications carefully if there are other types of securities in the fund, as the flag affects all of an entity's holdings.

• Note: when running the STAR to PACE process using Transfer Data - Batch or Transfer Data - Delta, Price Date Switch (9981) controls what happens in the case of a missing price, before falling back to Value At Cost - No Price Found

• The table below shows what happens on dates when there is a missing price in the various combinations of these elections

Reference Data

Storage & Configuration

Each Venture Investment security master file (SMF) is modeled as Preferred Stock or Common Stock. Preferred Stock has optional functionality related to marketable shares, but the baseline functionality and processing are identical in Eagle Accounting.

Market Data

Venture Investments are priced like their marketable counterparts. The difference is that market prices are not readily available. This requires the use of stale or estimated prices to achieve valuations.

Security Data

Venture Investment SMFs can be set up and maintained in Issue Viewer or Reference Data Center (RDC). The lists below capture all required fields.

• Issue Name (961)

• Primary Asset ID (14) & Type (1432)

• Processing Security Type (3931): EQCSPF (Preferred Stock) or EQCSCS (Common Stock)

• Security Type (82) & Sub Security Type (1464): use these fields to identify your Venture Investments vs. other Preferred Stock and Common Stock

  • These fields are driven by the SECURITY TYPE and SUB SEC TYPE Code Categories respectively

• Price Multiplier (18) = 1.00

• Quantity Scale (19) = 1.00

• Issue Country (1418)

• Asset Currency (85)

• Primary Exchange (17): we recommend adding a new value to the IEXCHANGE CODE Code Category with short code = NONE and long code = NOT APPLICABLE

• Underlying Security ID (1348): a placeholder security can be created and linked at any time to represent the the Stock or Tokens

• Conversion Ratio (215): enter the ownership percentage

  • Alternatively and with small configuration changes, a user-defined field can be used instead

Trade Processing

Trades are entered using the Book Trade module once the entity and reference data have been configured. Enter the appropriate entity, security identifier, and trade (35)/settle dates (37) and click Submit to query for the security.

Open

Right-click the Venture Investment security and select Open > Buy. The lists below captures all required fields to book a trade.

• Shares (40)

• Price Per Share (45)

• The following fields are available to capture trade fees and taxes:

  • Commission (47)

  • SEC Fee (48)

  • Tax Amount (46)

  • Stamp Duty Tax (51)

  • Other Fee (3752)

• Broker (88): we recommend adding a new value to the BROKER CODES Code Category with short code = NONE and long code = NOT APPLICABLE

Close

Right-click the Venture Investment security and select Close > Sell. The lists below captures all required fields to book a trade.

All fields on the close are the same as the open, except Lot Selection Method (27). This defaults to the entity-level election, but can be overridden.

Cancel & Rebook

Faulty Venture Investment transactions can be cancelled and rebooked using the Cancel & Rebook Trade module. Alternatively, trades can be cancelled using Cancel Trade, with the transaction rebooked using the Book Trade module.

Accounting

Once a Venture Investment trade is booked it will be picked up in Eagle’s global workflow. Accounting valuation is calculated when posting unrealized gain/loss, and Data Management valuation is calculated in the STAR to PACE push. These can be scheduled or triggered manually.

• Global Processes (V17)

  • Accounting Valuation: Unrealized Gain Loss Entries > Post Daily Fund Unrealized Gain Loss-Position

  • Data Management Valuation: Eagle STAR to Eagle PACE Direct Processing > Transfer Data - Batch

• Global Process Center (prior to V17)

  • Accounting Valuation: Unrealized Gain Loss Entries > Post Daily Fund Unrealized Gain Loss-Position

  • Data Management Valuation: STAR to PACE Direct Processing > Transfer Data - Batch

Valuation

Venture Investments use the standard valuation methodology in Accounting and Data Management where Market Value = # of Shares * Quantity Scale * Price * Price Multiplier.

Conversion

The Create Exchange Offers corporate action can be used if a Venture Investment needs to convert into another type of Stock or Token. The Securitization Method must be in use to convert into Tokens, as described in Cryptocurrencies Best Practices.

Announcements are set up using Reference Data Center.

• From Asset ID (14): enter the Primary Asset ID of the Venture Investment

• From Post Action Price (369): best available price of the Venture Investment on the day of conversion

• Sweep Date (1197): date when the global corporate action process will pick and execute the corporate action (generally current date)

• Ex Date (65): date when the corporate action takes effect (conversion date)

• Corporate Action Status (54) = Released

• Mandatory/Voluntary Indicator (1734) = Mandatory

• To Asset ID (1348): Primary Asset ID of new Stock or Token

• To Post Action Price (319): market/agreed price of the new Stock or Token on the day of conversion

• Rate of Action (1001): enter the ratio that results in the correct shares of Stock or number of Tokens

• Corporate Action Type (1728) = Exchange Offer

To process the corporate action, use Accounting Center > Processing and Exceptions > Global Processes > Corporate Actions > Exchange Offer (V17+) or Global Process Center > Corporate Actions Processing > Exchange Offer/Assimilation/Unit Splits (pre-V17). Query for the Convertible Bond, set Corporate Action Begin Sweep Date (220) and End Sweep Date (221) to a range that includes Sweep Date from Exchange Offers panel, and submit.

Reporting

STAR to PACE (S2P)

Almost all reports in Eagle leverage data from the Warehouse, which is populated by the S2P process. This will be scheduled as part of the daily workflow, but can also be triggered manually as described in the Accounting section.

The S2P process creates a single row for each Venture Investment in the POSITION, POSITION_DETAIL, TRADE, and CASH_ACTIVITY tables. The MARKET_VALUE_INCOME column captures the total market value, inclusive of price fluctuations and period-to-date accruals payable or receivable. Spot transactions used for the Cash Method are not posted to the TRADE table.

Accounting Reports

Eagle has a core set of accounting reports that can be used to review Venture Investment information. These are designed to support the daily operational workflow for business users, allowing Grid Reports to be easily exported to Excel and customized to provide additional details as needed. Advanced Reports are intended to be client-facing and do not provide the same level of customization.

Data Management Reporting

Performance

The performance toolkit has full functionality to calculate market value-based performance for Venture Investments using data supplied by the S2P process. Risk and performance attribution features are available to analyze Venture Investment performance.

Automation

Venture Investment SMFs and trades can be loaded through the standard Message Center streams. The SMF must be loaded prior to the trade (trades do not spawn SMFs).