Semil Shah, Venture Partner at Lightspeed Venture Partners and an expert in the venture capital industry, highlights the significance of Portfolio Construction for General Partners in the field, Highlighting the importance of understanding and mastering the concept for a successful venture capital career.
Summary:
Portfolio Construction is a crucial aspect for General Partners (GPs) in the venture capital world. As the main responsibility of GPs is to assemble a diverse portfolio of high-performing assets, including best-in-class companies with substantial ownership, a thorough comprehension of Portfolio Construction is imperative.
This concept is pivotal in attracting investment from institutional Limited Partners (LPs), as it is a common topic of inquiry during the partnership negotiation process. Portfolio Construction methods can vary depending on the investment stage, asset class, and fund size, with distinct rules and practices for smaller and larger funds.
Successful Portfolio Construction demands expert reserve management skills and GPs should familiarize themselves with reserve management techniques to bolster their ownership in top-performing companies. Additional factors, such as geography, stage, and sector, may also play a role in determining the portfolio's composition and GPs may consider adopting flexible guidelines to guide their Portfolio Construction journey.
Full Story: HERE (HeyStack / Semil Shah)
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Reference:
- https://www.linkedin.com/in/semilshah/
- https://lsvp.com/
- https://semilshah.com/2020/02/22/late-night-musings-on-portfolio-construction/
- https://www.moonfare.com/pe-101/portfolio-construction
- https://app.fff.vc/post/1397696168
- https://app.fff.vc/post/839103225