How do VCs monitor their investments financial performance? And how often?
We do it quarterly as a team.
We go through the entire portfolio, touching really not that much on upside — because you’re already heard about that — but more on downside.
What companies will run out of money when, in particular, is #1 on the list.
And then analyzing how much money is left in the fund to allocate against future capital needs. As the years go on in any given fund, what’s left in “reserves” becomes more and more important because the investments on the edge — not killing it, but not going under tomorrow — start in some ways to compete for the limited reserves left.
We also provide quarterly update to our own investors, the “LPs”, or limited partners.
Since most start-ups raise on average perhaps 18 months of capital … as a group, as a cohort … the quarterly updates are only so interesting, really. As a team, oftentimes, there’s little for anyone to monitor or do between fundraisings every year-and-a-half on average. The individual partners obviously are much more involved.