Top 10 VC CFO Posts of 2023

These are the top 5 posts by engagement for 2023 from TheFundCFO Newsletter.

Reflecting on them, the most popular had some sort of tool, playbook, or template. Readers want actionable content that makes their lives easier - noted!

I want to share a big “thank you” to everyone who read, commented, & shared these posts and others. Happy holidays!

  1. #119 The Ultimate PE/VC Fund Checklist for Year-End Finance & Compliance: 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…

  2. #96 The Case for 30+ Co.'s Per VC Fund: Portfolio construction is a hot topic for VC funds and LP investors. Before investing, almost every LP will ask a VC: what is your portfolio construction strategy? There’s a lot of data, conventional wisdom, and strong thoughts on this. Some say concentrate. Others say diversify. What’s the right approach? We’ve talked to a lot of VCs. Even though a lot of VCs talk about the benefits of concentration, if you look deeper, almost all of them are getting >30 investments in a fund. 

  3. #98 Emerging VC Outperforms: Insights From Cendana, Sapphire: The right emerging VC managers can drive real outperformance in investment portfolios and will continue to do so for decades to come. Every manager in the market today was emerging at one point, and behemoths like a16z just ~15 years ago. While we find ourselves in a slower VC fundraising environment today, capital allocators are still investing in emerging managers…

  4. #75 VC Power Law & RTF Math (w/ Template): For years, we’ve been saying that every VC fund manager needs a fund model (portfolio construction and reserves). Why? A fund model provides a plan for investing, is often required by investors, and can drive outsized returns (and help avoid value-destroying mistakes)! While our fund models typically get super-detailed with various scenarios in play, we always find it helpful to simplify VC fund math (credit Fred Wilson in 2008) to something like the following:

    1. 1/3 of your investments lose money

    2. 1/3 of your investments breakeven

    3. 1/3 of your investments make money, with “~6% of investments generating ~60% of total returns” (credit Chris Dixon on the power law, citing Horsley Bridge industry data)

  5. #93 VC DPI & Power Laws - What They Mean Today: Insights on DPI from Fred Wilson (USV), David Zhou (Alchemist Accelerator), Beezer Clarkson (Sapphire), and David Clark (VenCap). When does DPI really matter? The job of a venture capitalist is simple in theory. Invest in a group of early-stage companies (often 20-30) over ~3-5 years. If the VC sources, selects, and supports at a high level, a few “winners” will emerge over a 10-year fund life (sometimes extended to 12-15 years). Ultimately, the VC fund must “distribute” cash back to its investors, driven most by the winners in the portfolio (DPI). VCs typically target >3x TVPI/DPI and >30% IRRs…

  6. #116 VC Napkin Math, Insights, Resources: “According to two well-known VC FoFs I’m close to, ~50% of their profits accrue after year 7. Many managers — myself included — raise new funds in the last year of the deployment period which is typically in years 3–4 of fund life. Sometimes the timeline is shorter for higher velocity investors. What should an LP optimally focus on in the underwriting decision, then?” Enjoy this Napkin Math!

  7. #114 VCs Selling (DPI), Portfolio Upside Bets, & CFO Tech Stacks: “VCs aren't just buyers. Let's talk about selling (Ryan Hoover). An investor's job is to deliver liquidity to their LPs, but knowing when to sell is the hard part. Things can change quickly. Dramatic market shifts can cause drastic shifts in valuations and the paper value of a firm’s portfolio. Your returns will have as much to do with selling as buying. And buying is a fairly rational decision. Selling tends to be emotional. And that is why selling is the hardest part of investing.”

  8. #111 Win With Operational Excellence in PE/VC: Why should you care about operational excellence if you’re running a PE/VC fund? What are some of the key tactics to achieve operational excellence? Why you should care:

    1. Investors: they want to see it and ultimately will require it

    2. Success: increase your odds of driving outperformance

    3. Competition: everyone’s doing it. Table stakes today and going forward

  9. #105 "Why Now?" for PE/VC Funds? The Data Says So: Less money is flowing into private equity & venture capital (funds and companies) in 2023 and likely 2024. We believe this creates an opportunity for outstanding performance. Historical data supports this…

  10. #100 LP Communication Best Practices + Fundraising References: If you’re a VC GP or CFO/Finance Pro, you’re likely thinking about your Q3 report and financials. At the end of each quarter, “The Playbook” requires VC funds to review and update their financial performance to investors. That means working with fund administrators / accountants to review portfolios and update company valuations based on your Valuation Policy. While the numbers matter, there is always a story behind the numbers! The best VC GPs and CFO/Finance Pros combine clear, accurate financial reports with a LP update letter that tells the story of what is going on in the portfolio.

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:

  • Tuesday: insights + interviews. Free for everybody.

  • Thursday: deeper dives on VC GPs, CFO/COO strategy, more insights from LPs/GPs, and our take on what it all means (from 15+ yrs. of experience). Exclusive to Paid subscribers (most of whom expense these insights).

“If you don’t like the road you’re walking, start paving another one.” -Dolly Parton

Mickey’s Christmas Carol (1983)

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