Question
Your fund is a VC fund in software services sector, where you are a general partner (GP). Your optimal portfolio size [1] is 10 ventures
Your fund is a VC fund in software services sector, where you are a general partner (GP). Your optimal portfolio size[1] is 10 ventures for this current fund of 11MM raised from your LPs.
Company = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10} ventures
After doing Berkus method based due diligence on 100 potential investments, you write checks according to below configuration for each fund.
Invested capital I = {0.5, 1, 2, 1, 0.5, 2, 1, 0.75, 1.25, 1} MM for F =
To your Fund's Limited Partners and investors, you showcase a projected DPI ratio based on your analyses of likely (projected) exit scenarios for the portfolio and exit multipliers for fund's sector:
E_proj = {GS, L, BH, B, GS, BH, L, B, L, GS}
Exit multiplier per scenario
{L = 0
B = 1.75
BH = 2.55
HR = 18
GS = 50}
Total Amount Invested (paid-in capital) in fund ($MM): _____________
Average investments ($) and percentage of fund, per company: _____________
Projected Amount of Capital Returned ($MM): _____________
Projected Distributed to Paid-In (DPI) Capital Ratio: _____________
Combined exit multiple projection: _____________
However, in Year 3, when your investment timeframe is up, you observe the following actual exits
E_act = {GS, BH, B, L, BH, HR, B, GS, BH, L}
Amount of Capital Returned ($MM) (actual and differential): ______, _______
Distributed to Paid-In (DPI) Capital Ratio (actual and differential): ______, _______
Combined exit multiple (actual and differential): ______, _______
[1] Please ignore valuation discounts and/or caps for each investment(s), or total equity stake per portfolio venture, during exit.
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