10+Yrs Venture Capital Fund Model

The Venture Capital Fund Model is a comprehensive tool designed to analyze the financial aspects of a venture capital fund, including its Management Company and supporting Venture Builder. The model generates financial statements, calculates relevant metrics, and provides graphical representations of key performance indicators (KPIs). It offers insights into fund management, deal structuring, and financial performance, enabling informed decision-making and strategic planning.

Key Components:

- Limited Partners (LPs) and General Partners (GPs) Assumptions: Allows users to set the number of LPs, their subscription amounts, GP commitment percentage, management fees, carried interest percentage, and other fund characteristics.

- Deals: Enables users to input details of venture deals, including venture names, maturity stage, transaction type, initial deal amount, ownership, and follow-on investments.

- Financing Type: Allows users to set interest rates for loan type deals and discounts to the VC for convertible deals.

- Financial Statements: Presents the financial statements of the fund, including income statement, balance sheet, and cash flow statement.

- Management Company Expenses: Calculates expenses of the Management Company, including labor costs, administrative costs, and any required equity injections.

- Venture Builder Assumptions: Enables users to set assumptions for the Venture Builder company, including the percentage of startups graduating to different funding stages, labor costs, and operating expenses.

- Graphs: Provides graphical summaries of major KPIs from both balance sheet and income statement perspectives.

- Checks: Ensures the accuracy and functionality of the model by aggregating various checks performed across worksheets.

Key Benefits:

- Informed Decision Making: Provides stakeholders with insights into fund performance, deal structuring, and financial viability, enabling informed decision-making.

- Strategic Planning: Facilitates strategic planning by presenting financial projections, identifying trends, and evaluating investment opportunities.

- Performance Tracking: Allows users to track fund performance, deal flow, and financial metrics over time, aiding in performance evaluation and goal setting.

- Efficiency Improvement: Helps streamline fund management processes, optimize deal structuring, and identify areas for cost reduction or revenue enhancement.

In summary, the Venture Capital Fund Model offers a comprehensive analysis of fund operations, deal structuring, and financial performance. It enables stakeholders to make informed decisions, strategize effectively, and track performance metrics for successful fund management and growth.

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MODEL GUIDELINES

So, a quick overview of the model, in the contents tab you can see the structure of the model and by clicking on any of the headlines to be redirected to the relevant worksheet.

On the manual tab you can feed the general information for the model such as: project name & title, responsible, timeline of the model and date and currency conventions.

Additionally, there is a description of the color coding of the model in the same tab. Inputs are always depicted with a yellow fill and blue letters, call up (that is direct links from other cells) are filled in light blue with blue letters while calculations are depicted with white fill and black characters.

There is also color coding for the various tabs of the model. Yellow tabs are mostly assumptions tabs, grey tabs are calculations tabs, blue tabs are outputs tabs (that is effectively results or graphs) and finally light blue tabs are admin tabs (for example: the cover page, contents, and checks).

For assumptions regarding the main characteristics of the fund, we can navigate to the “LPs - GP” tab. In this tab the user can set the number of limited partners (up to 10) and their subscription amount. Additionally, the user can set the commitment percentage of the General Partner(s). Finally, the user needs to input the percentage management fees, the carried interest percentage, the timeframe for the fees, as well as any required equity injections for the first months of the fund’s operations.

On the “Deals” tab the user can set the venture names, maturity stage, transaction type (Equity, Convertible, Loan), the initial deal amount, the initial deal date and ownership, as well as the follow-on amount and date.

The second part is related to the proceeds from the ventures, such as exit year, return multiple and risk adjustment, as well as percentage ownership (at exit).

On the “Financing Type” tab the user needs to set the interest rate for loan type deals, and the discount to the VC for convertible type deals.

The Fund FS tab relates to the financial statements of the fund, and the relevant financial statements are presented.  The Fund Mgt tab relates to the expenses of the management company. This company receives the management fees and spends funds on the various labor costs of the executives, as well as various administrative costs (sales and marketing, IT and servers, maintenance, utilities, admin costs and rent). 

Any additional capital needed initially during the marketing period can be inserted in the equity injections cells.

The above results in the financial statements of the management company in the “Fund Mgt FS” tab. 

Next, we have the venture builder company assumptions. This company sources startups and supports them until a selected portion of them can be sold to the venture capital fund (to be precise there are 3 ways: equity, loan, and convertible loan). The user needs to set the percentage that graduates to pre seed, seed and series A which succeed to be financed from the VC. This calculates a pool of startups which are supported according to their stage. In the next section, the user needs to set the labor costs as well as the various SGA expenses such as (the sales & marketing, IT & servers, maintenance, utilities, admin costs, rent), as well as their growth rates. 

Moving on to the next tab, a set of graphs summarizes all the major KPIs of the business both from a balance sheet perspective as well as from an income statement perspective.

Finally, in the last tab, various checks are performed and, or are aggregated here from the various worksheets. This tab ensures that everything on this model is working as it should.

All the above are summarized in the “Summary” tab which displays the most important parts of the model.

Important Notice: Yellow indicates inputs and assumptions that the user can change, blue cells are used for called up cells, and white cells with black characters indicates calculation cells.