with Marc Penkala, General Partner at āltitude
EUVC Academy · 46m · Fund Modelling, Portfolio Management
Part of Fund Modelling Series
Portfolio construction and decomposition in venture capital refer to how a fund is built and how returns are distributed across its portfolio. These elements directly influence fund performance through decisions on structure, ownership and exits.
This session focuses on how fund size determines portfolio structure, check sizes, reserves and ownership. It covers how diversification, follow-ons and portfolio construction affect outcomes, and how decomposition breaks returns into performance buckets, exit strategies and timing.
The aim is to understand how these elements translate into fund-level results based on realistic assumptions and market data.
Key Learning Points
Construction drives repeatability of returns
Consistent fund performance is more linked to construction than picking
Construction must balance downside protection with exposure to upside
Strategy consistency across funds supports repeatable outcomes
Magnitude and ownership determine fund outcomes
Outlier magnitude alone does not translate into meaningful fund returns
Fund-level impact depends on combining magnitude with ownership
Single large outcomes may have limited impact relative to fund size
Follow-ons shape value capture
Doubling down on strong assets can materially increase total returns
Follow-ons require a sufficient hit rate to be value-accretive
Not following on can leave significant value unrealised
Exit strategy and timing drive realised outcomes
Timing entry and exit is a core determinant of venture outcomes
Active exit strategies, including early sales and recycling, affect performance
Market windows constrain when returns can be realised
