with Marc Penkala, General Partner at āltitude
EUVC Academy · 1h 2m · Fund Modelling
VC fund modelling starts with the assumption sheet, which defines how capital is deployed, how assets evolve and how returns are generated. Small changes in assumptions can materially shift fund performance and shape how clearly outcomes are communicated to LPs.
This session focuses on building an assumption sheet across three areas: core assumptions, asset development and equity valuation dynamics. It isolates key levers such as entry pricing, follow-ons, fees and timing, then connects them into a model that explains fund performance.
Key Learning Points
Fund performance is driven by a few key levers
Fees reduce deployable capital and create large performance gaps
Entry valuation sets return potential and exit thresholds
Follow-ons depend on hit rate, not strategy structure
Levers must be combined, not optimised in isolation
Assumption sheets translate inputs into outcomes
Assumptions must be calibrated to real market data, not generic benchmarks
Outputs must link to fund performance metrics
Clarity and structure outperform complexity
Venture outcomes follow power law and timing dynamics
Returns are driven by magnitude of outliers
High risk is required to generate alpha
Timing determines investment and exit success
Fund life limits which returns can be realised as DPI
Follow-on strategies reshape return profiles
Follow-ons can increase ownership and absolute returns despite lower MOIC
Follow-ons lower required exit sizes for fund returners
Performance hinges on minimum hit-rate thresholds
Wrong follow-ons underperform entry-only strategies
Recycling and fees drive capital efficiency
Recycling can increase capital deployed beyond fund size
Recycling can materially improve TVPI and returns
Recycling is constrained by timing and LP terms
Lower fees can increase both LP returns and GP carry
