General VC Questions

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Ask anything about venture capital, and there will likely be an answer. Sometime there is no answer, and you may need to consult a professional. The training data is growing every day, which will help the system answer even more questions in the future.
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Can I warehouse an investment for start fund?

Can I warehouse an investment for start fund? If it is a past deal I have made, can I bring it into my start fund. 
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What key metrics should I prioritize when reviewing annual financial reports?

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what is the j curve

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Please refer to the following questions in context of making adaptations to the Foresight Model:

• 6. Industry Benchmarks and Best Practices  • How does the recycling rate in this model compare to comparable funds in similar sectors or stages? • What lessons can be drawn from successful funds that used similar recycling strategies? • What are industry best practices for the proportion of recycled capital relative to total distributions? • How does the model's assumed capital recycling rate compare to those of high-performing funds • 7. Impact-Based Outcomes and Reporting (e.g., Article 9 Funds)  • How can the model be adapted to integrate non-financial KPIs that measure impact outcomes in line with Article 9 requirements? • What specific sustainability metrics (e.g., carbon reduction, social equity improvements) are incorporated, and how are they quantified? • How does the model account for both financial and non-financial returns when calculating fund performance? • Are the chosen impact metrics aligned with the EU Taxonomy and SFDR reporting standards? • What frameworks (e.g., GRI, SASB, IRIS+) are used for measuring and reporting impact, and how does the model accommodate them? • How is impact data collected, verified, and reported throughout the fund lifecycle? • What weighting is applied to impact metrics versus financial performance when assessing the success of the fund? • Does the model include scenario analysis for potential trade-offs between financial returns and impact goals? • How does the model simulate the risk of impact underperformance and its implications for investors? • What governance mechanisms are in place to ensure that impact goals are maintained throughout the investment period?
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In the Foresight model: Which key variables are stress-tested, and how are different economic environments modeled?

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In the Foresight model:

3. Recycled and Retained Capital Strategy  • What criteria are used to determine the amount of capital to recycle versus distribute to LPs? • Are there predefined thresholds or trigger events that guide the recycling of capital? • How does the fund balance between maximizing distributions and maintaining recycled capital for follow-on investments? • What are the typical scenarios where recycling capital is preferred over distribution? • How does recycling impact the GP's carried interest calculation, and is this communicated transparently to LPs? • Is recycled capital allocated primarily to existing portfolio companies or reserved for new opportunities?
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In the Foresight Model:

2. Return Projections and Performance Assumptions • What are the best practices/benchmarks to reflect power law assumptions for fund return multiples? • How does the model account for the distribution of portfolio companies by their expected performance (e.g., 60% written off)? • What IRR and multiple benchmarks are used to assess model performance, and how do these compare to historical VC fund performance? • What distribution assumptions are used for exit outcomes (e.g., IPO, acquisition, write-off)? • How sensitive is the model to changes in exit timing or valuation at exit? • Are power law distributions explicitly modeled, or inferred from historical data? • How does the model handle the J-curve effect, especially in the early years of the fund?
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In the Foresight model, What best practices are used to ensure the accuracy of the modeled distributions under each waterfall type?

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How does the model simulate the impact of clawback provisions under both structures - EU and US (Foresight)

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How does the model differentiate between EU and U.S. waterfall structures when calculating distributions (Foresight Model)

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How does the Foresight model account for dilution effects from future funding rounds?

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In the Foresight model, approximately 23% of the committed capital is invested in operating the fund. What are industry best practices for this amount, and is it reasonable?

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How is the target capital recycling rate calculated/achieved? (in reference to the Foresight Model)

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Are there any missing values or figures intentionally omitted for confidentiality in the Fund report?

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What Happens to Capital Call Money Before It’s Invested?

How is the money collected from a capital call treated before it is invested into startups? Does it accrue interest in a bank? What restrictions are imposed on that money - eg. can it be invested in crypto while the fund identifies the right startup to invest in?
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Difference Between Individual and Organization LPs in Capital Accounts?

I added an individual LP to the “closing” stage but didn’t see them in the capital accounts section. Only when I added an organization as an LP I could copy them to the closing funnel. Are there any differences in how an individual vs an organization are handled in Decile Hub? Why?
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What all is included in the expenses portion of the income statement?

Could you please share the components of the expense report:  • What all is included in the expenses portion of the income statement? Is management fees and carry considered an expense, or a distribution? 
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What is the difference between target recycling based on committed capital versus management fees positives and negatives?

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Why does changing the Average Hold Period for different exit types (write-off, small, medium, large) produce inconsistent results?

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How to calculate Forecasted Target Recycling %?

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Why is the initial recycling amount set to 6 years or less from the time of exit? What happens if the recycling threshold changes?

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Where does the Assumption Target Recycling % come from? Changing this number doesn’t seem to affect any other figures. Is there a correlation between the Assumption % and Forecast %? Or are they completely separate?

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Can the early LPs pull out in certain circumstances where the funds cannot hit their target?

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How to turn from Inactive LP status into an active one?

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What would be the best way to estimate that probability of investment of the prospect?

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Q1. How are impact indicators reported on - e.g. in the case of Art.9 funds in fund accounting?

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Is there a way to extract data on valuations for similar companies - e.g. similar to how Crunchbase works?

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Does the system automatically update any committed capital based on LPAs?

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Q2. What is the process to enter information for the capital call (e.g. the amount and then the percentage?)

I was not able to proceed as the amount to be called could not be updated.
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Q2. What is the process to enter information for the capital call (e.g. the amount and then the percentage?)

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Q1. How do we set the overall commitments for the fund (e.g. 10 million)

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What are the controls for automated cap table updates?

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What should be put in the section “Notes to LPs”?

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Does the Statement of Changes in Investors’ Capital specifically indicate the current available capital, or is it strictly a historical summary of changes over the reporting period?

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Would personal travel costs be able to be listed as an expense if it served the purpose of doing work for the fund?

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In the context of a venture capital fund’s financial statements, which specific types of transactions or earnings are typically categorized under “Other Income (Loss)”?

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Which waterfall gives better return to the firm

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What are the specific components of "Total Income" and "Total Expenses" in the annual report?

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Is there more information on how the "Total Investors' Capital" is calculated and what it comprises in the annual report?

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What is a Total Addressable Market (TAM)?

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What are key red flags in an investment schedule?

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What are the fundamentals of analyzing an investment portfolio?

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Can LPs sell shares in lieu of capital calls?

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On average, when does an LP expect a startup to generate profits?

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Are financial statements fully transparent for all LPs to review

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Are annual reports audited internally or do LPs hire a third party?

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What is the minimum amount I can close in a Start Fund?

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What are the red flags LPs look for in valuation methodologies?

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How do firms reconcile discrepancies between internal valuations methods?

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If partial assets were sold in a company, how does the valuation change?

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