Venture Fund Portfolio Construction | Journal | Kauffman Fellows
added by Juan Orbea · updated 2y ago
Venture Fund Portfolio Construction | Journal | Kauffman Fellows
- Target Ownership From Initial Investment: The percentage of the company the firm will look to get with their average initial check size.
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Fund Size: amount of capital committed to fund.
- Management Fee and Carry Percentages: Typically funds have a 2% yearly management fee over the 10-year life of the fund to cover all overhead expenses and a 20% carry.
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Funds taking a more concentrated approach and investing in fewer companies most likely are assuming that one of their investments has an extremely large outcome while the rest either go to zero or whose exits are much more modest. This is called the power law dynamic and historically, this can be seen happening often in venture capital. Funds takin... See more
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Average Initial Check Size: The average amount that will be invested in the first round of fundraising (assuming that more will be invested in the top-performing companies if there is allocation to follow-on investments).
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Targeted Net Return: The targeted amount of capital the fund looks to return to its LPs.
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Portfolio construction is the careful calculus of a number of different decisions related to how a fund is run and the impact that each of those inputs have on each other . The major contributing factors to portfolio construction are:
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Fund Level Expenses: In addition to the management fees that are paid to the management company for running the fund, there are other expenses that are deducted directly from the fund assets. These fees include legal set-up costs, fundraising expenses and other administrative, legal and infrastructure costs. These costs can range from $250K on the
... See morefrom Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- This blogpost explores venture portfolio construction and the various trade off implications a GP must consider and enables you to construct your own portfolio to understand how various assumptions impact returns to LPs and GPs.
from Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago
- Required Return Fund Capital to Targeted Net Return: Going off the example above, if a fund is targeting a 3x net return, meaning they wish to pay to their investors $3 for every $1 invested, the required fund return to hit 3x is actually higher than $300M given fees and carry. It is important to understand the total required return needed to hit
... See morefrom Venture Fund Portfolio Construction | Journal | Kauffman Fellows by Kauffman Fellows
Juan Orbea added 2y ago