Top VC CFO Posts of June/July

Hi Everyone! đź‘‹ Welcome to the new members of @TheFundCFO crew! We recently released our New VC Fund Playbook + Model Downloads @ Streamlined.Fund! Re-linking our top 2023 posts: #67 Top VC CFO Posts & References, #65: WTF is Going On in VC (+ New Fund Model Data) & #60 Emerging VC Fund Tech Stacks!

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 general industry enthusiasts/people who want to learn :).

“We have a strategic plan. It’s called doing things.” -Herb Kelleher

Top 3 Posts by Engagement in June/July

We’ve aggregated our top three posts from June/July - these ones really resonated with thousands of views, shares, and feedback! Please do us a favor and like/share if you haven’t already. In the meantime, enjoy!

“After meeting thousands of PE/VC fund managers and investing in hundreds, I was able to build my own VC fund playbooks, fund budgets, and fund models that aggregated best practices, organization, and insights. Recently, I partnered with my old friend Eddie Duszlak to take all those learnings and streamline them into one place, Streamlined.fund. We’d appreciate if you check it out and share with someone who may benefit from it! You’ll find all of our free models / budgets there, as well as some souped-up versions and our new VC Fund Playbook.”

This is one of the most common questions we get as LP investors and VC CFOs for hundreds of funds over the past three decades (collectively w/ Eddie Duszlak). There’s no one right answer here! We think it’s best to simplify by asking yourself a question.

What is the most valuable place to spend my time? How much time am I spending on the “other stuff?” We’ve seen great VC investors maximize time focused on:

  1. Investing: making great investment decisions (driven by research, pipeline)

  2. Supporting the companies you’ve invested in

  3. Fundraising (so that you have money to do more of #1 #2)

VC investors (and investors of all types, including PE/VC, public) can follow this simple framework to arrive at the right answer. For VC funds, the most common times we see funds hire a VC fund CFO are when they hit some combination of the following milestones, although it’s not a hard and fast rule:

  1. Portfolio: >50 companies

  2. AUM: $20m - $200m

  3. Growth: planning to raise their next fund in +/- 1 year and want to have great data, materials, and processes in place

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:

This point can’t be overstated! In a VC fund portfolio with 30 investments, this means that ~2 companies will drive ~60% of the total returns.

You need to hit home runs to deliver superior performance to your investors!

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Picture of the Day: New Orleans, LA

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!”