Best practices for emerging managers as they approach capital calls and distributions.
The questions a fund manager asks are similar:
- How much should I invest per crop (startup)?
- How can I prepare to weather future storms (market cycles)?
- How and when can I yield a large enough harvest (return) for the entire partnership to share?
But LPs aren’t only focused on when funds deploy the uncalled capital on their balance sheets. They also typically want to know how best to manage capital that they’ve committed but has yet to be called. Because they typically want that capital to continue to appreciate while staying liquid, GPs tend to prefer a holistic cash flow strategy that encompasses both capital call strategies and distribution strategies designed to show LPs exactly how they intend to deliver the best possible results.
Review these Capital Call and Distribution templates
- Capital Call & Distribution Notice Sample Cover Letter and Description by Institutional Limited Partners Association (ILPA)
- VC Portfolio Construction Model and Cash Flows Template by Dan Clayton, SVB Capital
Click on each topic below for a deeper dive into how fund managers should think of cash flow management, as well as strategies for balancing the needs of GPs and LPs alike when mapping out plans for capital calls and distributions.
Cash Flow Management Considerations
Component 1 of 4
Considerations for managing cash flow throughout the fund cycle.
Things to consider when generating a fund’s capital call strategy.
Capital Call Lines of Credit
The pros and cons of capital call lines of credit.
Considerations for managing a fund’s distribution strategy.
Read the other articles in this Emerging Manager article series
Building a Comprehensive Data Room
Establishing, Navigating and Maintaining LP Relationships
Pitch Your Fund by Highlighting What Makes You Noteworthy
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