New updates and improvements to Foresight
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Hello spring update to the Venture Capital Model (renamed from Venture Investor Model):
Management Company
sheet to reflect Quarters, not Years (the timescale should have said Quarters and should have been 80 periods).Forecast
to eliminate possibility of calculating recycling larger than possible with proceeds in a given periods with certain recycling structure options (added a min() test to a few lines).Get Started
to correctly handle late-stage investments (previously did not account for the last two stages correctly).Forecast
sheets to bring them to parity with the changes to the LP waterfall.Get Started
to provide more detail behind the average investment to make the difference between the number of investments and the invested capital clearer.Forecast
sheet.Get Started
for new method to forecast overall invested capital, and edited Forecast
to create the algebra to forecast the base for investments using assets under management and called capital. This was a heavy update, impacting management fees and deployment subcalcs. It will not always calculate a perfect called capital = committed capital under all scenarios, but is more reliable and still reflects the practical difficulties for funds budgeting for investments and fees with some of the recycling and fees options they may be using in their LPA. Someday I'll get the algebra perfect, until then we will live with a real life scenario.As always, questions, ask anytime.
Small edit in the Cap Table and Exit Waterfall Tool:
Cap Table, Anti Dilution
to adjust calculation of broad-based and narrow-based weighted average so it uses the amount invested in the new round, not the amount invested by each of the existing shareholders in past rounds, in the calc for the new conversion priceSignificant update to the Exit Waterfall
in the Cap Table and Exit Waterfall Tool:
Exit Waterfall, Simple
sheet to add in features previously only in the base Exit Waterfall
and Exit Waterfall, Extended
sheets, bringing this stucture to match the features in the previous Exit Waterfall sheets, and deleted the older sheets and renamed the Simple
variant to just Exit Waterfall
. This was done because the Simple
version is built to use an easier formula structure than the pre-existing Exit Waterfall
and Exit Waterfall, Extended
sheets, and because of that it is easier to use because (1) the feature toggles to change the formulas based on the situation are no longer needed, and (2) is much easier to extend to cover more share classes and options. Previously it was very hard to extend the Exit Waterfall
sheet to cover more than the prebuilt number of share classes, now it is 100x easier to extend it for any number of share classes, options with different strike prices, or warrants with different exercise prices.Simpler, clearer,better, always innovating.
Please note that the Exit Waterfall, like the previous versions, is not built to handle unconverted convertible notes or SAFEs at exit, but can be done with a custom edit. Please contact me if you are interested in that.
Major update to the Venture Capital Model (renamed from Venture Investor Model):
Portfolio Construction
inputs to the Get Started
sheet and expands the number of rounds modeled from 4 to 6. This new approach allows you to model first checks at multiple entry points automatically (e.g. first checks at Seed and Series A, and then optional different follow-on strategies per each first check strategy). This is a major upgrade from previous versions which required a more complex approach to modeling multiple entry points (and where I offered different versions of the model for single-entr and multiple-entry strategies), and thus the previous multiple-entry version has been thus been deprecated.Scenarios
sheet to evaluate multiple return scenarios simultaneously. This was prebuilt in many of the venture capital models but had not yet been built into this version.Forecast
sheet to allow the model to handle up to three different LP bases with different return structures involving different preferred returns, return of capital, GP carry, and carried interest assumptions. In addition to this adding more detail to the LP return calculations and allowing for differential fee structures, this allows the model to handle scenarios where the fund has grants, philanthropic investors, or "catalytic" limited partners that may want no return of capital, limited returns, or different return expectations from the rest of the LP base. (Caveat that (a) currently different management fee rates for the LP bases is not supported at the detailed waterfall level, and (b)this waterfall currently only supports the case where all LPs are pari-passu to each other. Detailing the management fees by LP base and adding in LP seniority to the fund waterfall is next in the queue.)Small update to the Venture Capital Model, Average Cap Table:
Get Started
to (a) change the calculation of average invested per company at exit for later rounds and (b) adjust the capital allocation to different stages, as well as edits on Forecast
sheet to adjust the unrealized gains calculation.Update to Venture Capital Model, Quarterly Forecast:
Forecast
sheet and Get Started
sheet to eliminate the circular reference that would happen if you choose to recycle using new and follow investments option on Get Started
. The edits are in the calculations for deployment section on Forecast
and a new set of calculations around capital allocation in the Portfolio Construction section on Get Started
.Update to Cap Table and Exit Waterfall Tool:
Exit Waterfall
and Exit Waterfall, Extended
sheets to fix how warrants are exercised cashless. Previously the cashless exercise would result in the proceeds distribution check being off because the foregone proceeds from the cashless exercise was not accounted for going back to other shareholders. The method was changed to adjust the number of shares issued tot he warrant holders by the value of the foregone proceeds by the cashless exercise, if that option is selected. Thank you Preten for finding this.Exit Waterfall, Simple
sheet for calculating proceeds to warrants; previously the method subtracted out the foregone proceeds from warrant holders and added them back to the other sharedholders, which resulted in the same result, but I adjusted the calcs to use the same method of adjusting the shares so that the methods are consistent.Today I released an update to the Venture Studio Model that with edits to Total Investments, by cohort of New Investments, Proceeds, Writeoffs, and Invested Capital Exited, to not double count the proceeds from the investments in the studio, which flow through the studio and not the fund. Thank you James for finding this.
The Venture Capital Model, Manual Input model was updated with a new input structure to:
Details on how the input structure works:
The last live session Cap Table and Exit Waterfall Masterclass cohort for 2024 is now ready for registrations. Questions, contact me anytime.
Today I released an update to the Ecommerce Forecasting Tool that adds an expanded approach to the Forecast
sheet to forecast retention on a per-cohort basis and adds a new Historicals
sheet to analyze past cohort performance. The Historicals
sheet allows you to drop in historical retention data for your business and use it to automatically create an average retention curve for forecasting.
As always, you can download the updates through your original email receipt or by logging into Gumroad. The model is free; all donations, ratings and reviews are appreciated.
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