what is the j curve
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Please refer to the following questions in context of making adaptations to the Foresight Model:
Asked by:
Gauri Deoras
Gauri Deoras
• 6. Industry Benchmarks and Best Practices • How does the recycling rate in this model compare to comparable funds in similar sectors or stages? • What lessons can be drawn from successful funds that used similar recycling strategies? • What are industry best practices for the proportion of recycled capital relative to total distributions? • How does the model's assumed capital recycling rate compare to those of high-performing funds • 7. Impact-Based Outcomes and Reporting (e.g., Article 9 Funds) • How can the model be adapted to integrate non-financial KPIs that measure impact outcomes in line with Article 9 requirements? • What specific sustainability metrics (e.g., carbon reduction, social equity improvements) are incorporated, and how are they quantified? • How does the model account for both financial and non-financial returns when calculating fund performance? • Are the chosen impact metrics aligned with the EU Taxonomy and SFDR reporting standards? • What frameworks (e.g., GRI, SASB, IRIS+) are used for measuring and reporting impact, and how does the model accommodate them? • How is impact data collected, verified, and reported throughout the fund lifecycle? • What weighting is applied to impact metrics versus financial performance when assessing the success of the fund? • Does the model include scenario analysis for potential trade-offs between financial returns and impact goals? • How does the model simulate the risk of impact underperformance and its implications for investors? • What governance mechanisms are in place to ensure that impact goals are maintained throughout the investment period?
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In the Foresight model:
Asked by:
Gauri Deoras
Gauri Deoras
3. Recycled and Retained Capital Strategy • What criteria are used to determine the amount of capital to recycle versus distribute to LPs? • Are there predefined thresholds or trigger events that guide the recycling of capital? • How does the fund balance between maximizing distributions and maintaining recycled capital for follow-on investments? • What are the typical scenarios where recycling capital is preferred over distribution? • How does recycling impact the GP's carried interest calculation, and is this communicated transparently to LPs? • Is recycled capital allocated primarily to existing portfolio companies or reserved for new opportunities?
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In the Foresight Model:
Asked by:
Gauri Deoras
Gauri Deoras
2. Return Projections and Performance Assumptions • What are the best practices/benchmarks to reflect power law assumptions for fund return multiples? • How does the model account for the distribution of portfolio companies by their expected performance (e.g., 60% written off)? • What IRR and multiple benchmarks are used to assess model performance, and how do these compare to historical VC fund performance? • What distribution assumptions are used for exit outcomes (e.g., IPO, acquisition, write-off)? • How sensitive is the model to changes in exit timing or valuation at exit? • Are power law distributions explicitly modeled, or inferred from historical data? • How does the model handle the J-curve effect, especially in the early years of the fund?
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How does the hub track uncalled vs. called capital in investor statements?
Asked by:
Community Member
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What Happens to Capital Call Money Before It’s Invested?
Asked by:
Sushma Vadlamannati
Sushma Vadlamannati
How is the money collected from a capital call treated before it is invested into startups? Does it accrue interest in a bank? What restrictions are imposed on that money - eg. can it be invested in crypto while the fund identifies the right startup to invest in?
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Difference Between Individual and Organization LPs in Capital Accounts?
Asked by:
Sushma Vadlamannati
Sushma Vadlamannati
I added an individual LP to the “closing” stage but didn’t see them in the capital accounts section. Only when I added an organization as an LP I could copy them to the closing funnel. Are there any differences in how an individual vs an organization are handled in Decile Hub? Why?
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What all is included in the expenses portion of the income statement?
Asked by:
Sushma Vadlamannati
Sushma Vadlamannati
Could you please share the components of the expense report: • What all is included in the expenses portion of the income statement? Is management fees and carry considered an expense, or a distribution?
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