with Marc Penkala, General Partner at āltitude
EUVC Academy · 1h 20m · Fund Modelling
Part of Fund Modelling Series
Fund modelling in venture capital translates strategy into a concrete, testable structure that defines how a fund actually behaves. It matters because even strong deal picking cannot compensate for flawed portfolio construction or incorrect assumptions.
This session breaks down the core building blocks of a fund model, from portfolio construction and decomposition to distribution mechanics and assumptions.
It shows how these elements interact to shape outcomes and highlights the key levers that drive fund performance. It also emphasises the role of LPAs and assumptions as constraints and inputs that determine what a model can realistically achieve.
Key Learning Points
Fund modelling as a decision system
A model is useful only if it stress-tests strategy under realistic assumptions
Precision matters less than understanding what drives outcomes
Models break when core assumptions are wrong
Assumptions drive everything
The model is defined by its assumptions, not its mechanics
A small subset of assumptions drives most outcomes
Large assumption errors matter disproportionately to results
Portfolio construction over picking
You cannot compensate for poor construction through picking
Capital deployment over time shapes portfolio outcomes
Portfolio size reflects a trade-off between diversification and reliance on outliers
Constraints shape what is possible
The LPA defines what the fund can and cannot do
Ownership, reserves and allocation rules constrain how the fund operates
Models must reflect real constraints rather than ideal scenarios
