#118 Year-End PE/VC Legal, LP Takes, Checklists

Hi everyone! đź‘‹ We’ve published >100 posts - appreciate the support/ sharing w/ friends! Welcome to our new members of @TheFundCFO crew! We recently launched a paid tier and released our VC Fund Playbook + Models @ Streamlined.Fund! Re-linking top posts: #96 The Case for 30+ Co.'s Per VC Fund, #88 Latest Takes on the State of VC, #86 VC Fund Stacks, and Full CFO Archive.

There’s a lot of great content from notable VCs, LPs, and CFOs/finance pros on the internet. Here, we’re focused on pulling out the insights out that really matter, as well as finding the most current content that overlays historical lessons with current market dynamics, which are changing faster than ever.

Every Tuesday/Thursday, we bring you actionable tools, real-world experiences, and insider insights for #VC CFOs/Finance Pros and fund managers, #LP investors, and industry enthusiasts/people who want to learn :). As a reminder:

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We’ve aggregated our top posts from Q4 2023 and all-time - these ones really resonated with thousands of views, shares, and feedback! Please do us a favor and like/share if you haven’t already (or forward to a friend). In the meantime, enjoy! Re-linking a few here for reference (full list in header)!

As I’ve shared previously, Chris Harvey’s Blog is my go-to on VC fund legal. When he talks, we listen. He shared the following in a recent LinkedIn post:

Are LPs looking for better fund managers or better investors?"

Winter Mead: "It has to be both. The initial filter is ... what have you done as an investor [i.e., your track record]? You don’t have to necessarily pass the operational due diligence (ODD) with flying colors on Fund I... but managing compliance, thinking about the alignment of interests, and building in that direction [has to be there]."Here are some other great insights shared:

Adapting to a More Regulated Industry: The VC industry is moving towards more transparency and governance as it evolves from a PE subcategory to a mainstream asset class. Fund managers must adapt to increased regulatory pressures and LP expectations, which includes enhancing reporting systems, compliance management, and operational efficiencies.

The Denominator Effect: The Curse of Being Too Successful: If venture is too successful relative to public markets, institutions find it less appealing. Which is counterintuitive, but it also can make sense if you think of it in terms of extended investment time horizons where portfolio management theory and allocation strategies are atypical for most investors.

Last year in post #25 (it’s been a busy year of posting here :)), we shared our CFO/ Finance checklist (linked above). It’s that time of year again to make sure things are all set as we close the year. In it, we shared the following:

  • The Year-End CFO/Finance Checklist - you need one (see below)! Apply the checklist + software principles to position your fund for growth in 2023.

  • Run Your VC Fund Like any Business, with Software Principles. Document your key processes and automate, automate, automate!

  • Differentiate CFO from Financial Controller, Other Finance Roles. Divide & conquer w/ the resources you have while also planning for the future. Key questions for financial controllers are highlighted below for reference!

The Year-End CFO/Finance Checklist

We’ve seen a lot of different frameworks over the years to keep track of all the requirements for funds at year-end. One of our favorites is breaking things down into four buckets: portfolio companies, investor reporting, compliance/legal, and operations/HR. Here’s some of the top items in each bucket for year-end…

That’s all for today folks! Thanks for your support and spreading the word! Share this on Twitter or LinkedIn to help grow “the crew!”