For more than 90% of LPs, track record is the most important part of their due diligence. This puts great pressure on GPs to deliver complete and accurate performance data to prospective investors.
Betterfront has helped dozens of VCs upgrade their track record presentation to better engage with LPs. Here are 5 practical tips on how to present your track record data during your fundraising:
- First, always share your track record in Excel format and never, ever in PDF format. Most LPs review hundreds of deals a year and do not have the time to input PDF data into Excel spreadsheets. Using software to convert PDF to Excel will very likely lead to data errors and therefore to the wrong due diligence outcome.
- All track record data should be in one single worksheet. Yes, just one. Do you have 3 funds in your track record? Then do not provide 3 Excel files. Do not provide 1 Excel file and 3 worksheets. All 3 funds should be presented in a single Excel worksheet so that LPs can easily kick off their analyses - and give you feedback faster!
- This unique Excel worksheet should present your track record line by line, where each line represents a portfolio company - that is why it is also called a “deal-by-deal” track record. Very often, fund managers ask Betterfront if they should display the round-by-round information. While this information is important for fund returners and outlier portfolio companies, it might create an information overload for most LPs. Our suggestion is to only provide round information when LPs specifically ask for it.
- Sharing your track record data gives you another opportunity to tell your story. In order to do that well, fund managers need to share different categories of information: investment, deal, and portfolio companies data. When relevant, differentiate between data at entry and data at exit/current (e.g. ownership, valuation).
- Finally, your fundraising will most likely last more than 3 months. In this case, you need to update your fundraising with new quarterly data to show the development of your portfolio.
Your track record plays a key role in the LPs’ due diligence process. Following those tips will create a smoother fundraising process for you and your prospective investors. Reach out to Michel Geolier (michel@betterfront.io) to learn more about Betterfront and how they help GPs during their fundraising.
This blog post was originally published in the “The Capital Behind Venture: 2020” produced by our friends over at Moutside Ventures. The full report provides insights from over 60 Limited Partners (LPs) and Family Offices who invest in European Venture Capital funds
