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Design-led software that allows you to see in real time the true dimension of your investments and the value and impact they create.
Simplify your valuations
- Record historical valuations for each portfolio company
- Run side-by-side comparisons of company valuations
- Instantly calculate the IRR for each company, and for the fund as a whole
62 Companies
Dealflow
44 Companies
Portfolio
32% IRR
Portfolio
Gain new perspective on your fund’s performance
Gain new perspective on your fund’s performance
- See how your current portfolio aligns with your investment focus
- Discover new insights through our customisable reporting
- Automatically calculate your NAV, DPI, TVPI, and more
Stay informed with real-time updates
Stay informed with real-time updates
- Request and receive updated metrics and captables directly from founders or internal team members
- Browse the latest news articles for each portfolio company
- Communicate with founders directly from our platform
Mastering the Art of Venture Capital and Private Equity Portfolio Management in 2023
In this in depth article you’ll discover the most important principles of portfolio management. Plus, strategies make venture capital and private equity portfolio monitoring more effective and profitable.
What is PE and VC Portfolio Management?
For any investor, private equity or venture capital portfolio management is part art, part science. With thousands of moving pieces, data points, decisions and market machinations, managing a portfolio of companies is complex. VC and private equity portfolio monitoring is a strategic process that involves identifying, assessing, investing in, and managing a collection of companies. And all of this must be done in line with a fund’s overall strategy, investment horizon and risk tolerance, to deliver maximum returns for LPs and GPs. It’s a careful balance of maintenance and proactive change to maximize return on investment. Simply, the way in which a portfolio is managed has a sizable impact on overall fund performance. In other words, it’s not simply the choice of companies that are invested in that determines investment returns; it’s just as much about the oversight, management and communication with them that happens after an investment is made. This is the art of private equity and venture capital portfolio management.
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How Exactly do PE and VC Portfolio Management Work?
Historically, much of the process of portfolio management has happened through a combination of spreadsheets, emails, data analysis and experience-gained decision making. However, as we’ll discuss in this article, there are now PE and VC portfolio management tools that streamline this previously manual process, making VC and private equity portfolio monitoring much more efficient and effective. Complicating things further, the true success of portfolio management is only fully understood at the completion of a fund’s cycle -- that is, when the investment period has elapsed and results can be definitively calculated.
- Maintaining a real-time understanding of portfolio company performance
- Tracking fund portfolio performance, including IRR, NAV, DPI and TVPI.
- Managing asset allocation to understand how capital is being utilized and calculate expected returns
- Tracking portfolio company funding, including who has enough, who requires more and what future funding needs will be.
- Communicate with and get updates from portfolio companies
- Risk profiling and management to balance exposure and align with fund goals
- Benchmark portfolio companies against competition and the market
- Perform due diligence on companies in an investment pipeline.
- Maintaining a real-time understanding of portfolio company performance
- Tracking fund portfolio performance, including IRR, NAV, DPI and TVPI.
What's the Difference Between PE and VC Portfolio Management?
The general principles of private equity and venture capital portfolio management are fundamentally the same. However, due to the different nature and stage of the investments that private equity and venture capital focus on, there are some practices distinct to each. Let’s look at these now. When it comes to private equity, investors focus on a wide variety of investment vehicles, including leveraged buyouts, real estate, venture capital, growth equity, securities, and more. Often all within a single fund. Because of the varied types of investment vehicles, investment decisions and private equity portfolio management relies on an equally diverse set of inputs that influence decision making, including P&Ls, market research, historical performance, market cap, and more. On the other hand, venture capital investing is focused more on early or growth stage investments in private companies. This means, especially when it comes to early-stage investments, that venture capital investors have to rely on company visions, projections and team composition to make decisions, rather than more concrete economic data that is typically available to PE investors.
The 8 Fundamentals of Private Equity and Venture Capital Portfolio Management
So, now we’ve covered the nuances of venture capital and private equity portfolio management, let’s dig more deeply into the fundamental aspects of portfolio management that apply to both forms of investing.
The Role of Technology in Investing: Portfolio Management Software
As evidenced above, private equity and venture capital portfolio management is at times a herculean task. In fact, how well it is performed is a major driver in fund performance. Thankfully, what once was a largely manual, disparate process can now be done in a more efficient and streamlined way using PE and VC portfolio management software. Venture capital and private equity portfolio monitoring software allows firms to see in real time the true dimension of their investments and the value and impact they create. It's important to note that while PE and VC portfolio management tools greatly enhance portfolio management, it doesn't replace the need for human judgment and expertise. In short, private equity and venture capital software aid better decisions through greater visibility and more data, however investors must still define strategies and interpret the data. With that said, venture capital and private equity deal tracking software is a must-have for any firm today. Let’s take a look at some of the ways these portfolio management tools simplify and enhance portfolio management.
Data analytics and machine learning - Private equity and venture capital software tools enable portfolio managers to process vast amounts of data quickly. They help investors identify patterns, analyze market trends, track company performance, and more to make better, data-driven decisions.
Communicate with portfolio companies - A steady stream of communication is critical to managing and overseeing portfolio companies. Portfolio management software allows investors to do this within the platform itself, in the process consolidating all communication in one place. In this way, this kind of technology acts as a portfolio CRM.
Reporting and updates - Portfolio and deal management software allows for real-time tracking and visualization of portfolio performance. Investors and managers can use dashboards to quickly get an overview of their portfolio's performance and drill down for more detailed information. This includes the ability to request and receive updated metrics and captables directly from founders or internal team members
Track company and fund metrics - Effective portfolio management depends on always “knowing the numbers”. Venture capital and private equity deal tracking software makes it easier to do this by automatically calculating IRR, MOIC, NAV, DPI, TVPI, and more.
Real-time visibility - With the real-time updates and metrics for portfolio companies available via private equity and venture capital software, firms and their LPs and GPs gain unmatched visibility. This transparency aids portfolio management as it allows investors to assess where additional input -- be it financial, operational or otherwise -- may be required for a portfolio company.
Edda PE and VC Portfolio Management Software
Edda PE and VC portfolio management software is purpose-built by industry veterans to help firms more efficiently and effectively manage their portfolios. Investors depend on Edda at all stages of investing to improve their portfolio monitoring, reporting and due diligence processes. Edda is an all-in-one portfolio management software and deal flow software. Used by hundreds of companies to manage $30 billion-plus in investments, it’s the leading private equity deal tracking software, deal flow pipeline softwareand portfolio CRM.
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