Startup Funding Espresso -- Communicating With LPs

Communicating With LPs

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In launching a VC fund, you’ll need to set up ongoing communication with the Limited Partners called LPs.

It starts with setting expectations for the returns on the fund.  

In many cases, it’s 20% to 30% per year, with most funds returning capital in years 7 to 10.

For ongoing communications about the fund, set up a template to show the following:

1. List of the portfolio companies with name, weblink, and main product.
2. Include the funding date, valuation at the time of funding, and current valuation.
3. Show exited companies with capital returned to investors.
4. Show standard fund metrics such as IRR for the fund, Distributed to Paid-In capital (DPI), and Total Value to Paid-in capital (TVPI).
5. Add a short summary of the portfolio companies and how they are doing. 
6. Distribute the report each quarter and a more detailed version annually.
7. Consider holding an annual meeting in which the LPs can meet the CEOs and discuss directly about their company.

It’s important to be transparent at every step of the way as all information is ultimately made known to the LPs.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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