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One of the core responsibilities of a general partner (GP) is to report with both their Limited Partners (LPs) and portfolio companies. Gale Wilkinson, Founder of Vitalize Venture Capital, joined us to break down how their team engages with and reports to their LPs.
Why send LP Reports?
Just like any relationship, the LP <> GP relationship is all about trust. In order to better establish a relationship and improve the odds of raising capital for a future fund, GPs and venture funds need to have a system in place to report to and communicate with their LPs.
>> Check out Visible’s LP Template Library here.
Raise Future Capital
Not only are venture funds and general partners competing against other venture funds for LP capital, they are also competing against other asset classes. Of course, LPs will look back at your performance of previous investments but will also be judging you and your skills as a partner. Having a proven history of strong performance and communication is a surefire way to increase a GPs odds of raising funds.
Help Portfolio Companies
Different limited partners will offer different skill sets and opportunities. All portfolio companies are looking for help — that might be customer introductions, fundraising options, and hiring. Limited Partners can be a great source for VCs to help out portfolio companies. In turn, this only improves a founder’s relationship with the fund and improves their odds of success.
Some limited partners will have a proven track record or expertise in the market. Because of this, they might understand the space even further and can help when it comes to due diligence and vetting potential investments. As Gale shares above, they have an LP that has expertise in workflow tech and help them with due diligence in the space.
How to create a tear sheet for your LPs
Gale and the team at Vitalize have done an incredible job of using tear sheets to help keep their LPs in the loop. The Vitalize team uses both the qualitative and quantitative data they collect from their portfolio companies and create a single page tear sheet for each company they can share with their LPs. Check out a few example tear sheets below:
A few things they include in their tear sheets:
LPs are generally busy and have investments across many different asset classes. In order to help with them understand what a portfolio company does, be sure to include a quick description and the reason why you invested.
The team at Vitalize also likes to include qualitative updates from each portfolio company. This is generally tied to revenue milestones but can also cover financing rounds and major hires.
Of course, LPs want to see the financials and information behind an investment. The team at Vitalize includes basic investment information like initial investment dates, capital invested, Vitalize’s value, and more.
Using the KPIs and data that the Vitalize team collects from their portfolio companies they build a simple table that shows a companies quarterly performance. A few of the metrics the Vitalize team tracks and shares are:
- Gross Margin %
- Total Expenses
- Cash Balance
- Months of Runway
LP Reporting Templates to Get You Started
Ready to take your LP reporting to the next level? Check out our LP Reporting Templates to get you started. Or schedule a call with our team to learn more here.