Which Venture Capital Model Should I Use?
I offer a range of models for venture capital funds. All share the same stucture for reporting cash flows and fund performance metrics, but have a few key differences.
Portfolio Construction
Portfolio construction is the process of creating your portfolio strategy, check sizes, follow on reserves, and expectations around valuations, ownership, and dilution over time. In fund models, portfolio construction drives the logic used to budget for the deployment of capital (e.g. new, follow) and forecast proceeds from investments, both in terms of timing and how much. One of the primary differentiation between the different venture capital models is how the logic for portfolio construction works, and it essentially ranges from simple to more complicated, detailed at Portfolio Construction.
This model is the same as the Venture Investor Model, and adds on the ability to track a portfolio using the same tracking structure as the Angel and Venture Fund Portfolio Tracking. This allows investors to update their forecast with actual results and analyze their investment pacing by comparing their budgeted capital deployment to their actual.
Portfolio Tracking
For tracking a portfolio, the free Angel and Venture Fund Portfolio Tracking offers an easy way for investors to track their portfolio, and the paid Venture Investor Model with Actuals Tracking layers the Venture Investor Model forecast and the tracking model to allow investors to create forecasts, track performance, and compare performance (and most importantly, budgeting for investment pacing) to operate a fund.
Timescale
Two models, the Venture Investor Model, Venture Investor Model with Actuals Tracking, and Venture Capital Model, Quarterly Forecast create quarterly forecasts, all free models create annual forecasts, except for the Overall Forecast variants, which do not forecast cash flows over time (only the totals).
Financial Statements
Financial statements - statement of operations (e.g. income statement), statement of financial condition (e.g. balance sheet), and statement of cash flows are only prebuilt in the paid models, the Venture Investor Model and Venture Investor Model with Actuals Tracking.
Preferred Return and GP Carry
Preferred return (hurdle rate) and GP carry are only prebuilt in the paid models, the Venture Investor Model and Venture Investor Model with Actuals Tracking.
Management Company
The paid models - Venture Investor Model, Venture Investor Model with Actuals Tracking, and Venture Capital Model, Average Cap Table - include an additional sheet used to budget the expenses of the management company running the fund. More details at Budgeting the Management Company of a Venture Capital Fund.
Background on those terms at How to Model a Venture Capital Fund
