What is a portfolio company? A company a private equity or venture fund has invested in and now holds: one line in the fund's list of holdings, with a cost, an ownership percentage, a mark and a stream of quarterly updates. The phrase is used from the fund's side; from the company's side it is simply a company with an investor. This page is what the fund's portfolio lead keeps on a portfolio company each quarter, what the portfolio company management review sheet on this site works from those figures, and where the company's own concerns, its cap table, its fundraising, its operations, stop being this record's business.
Four things the fund keeps on every portfolio company
What it paid (the cost of the position, across every round it joined), what it owns (the fully diluted percentage, which moves with every round it did not join), what it marks the company at (the last priced round or the fund's own valuation policy), and what the company reported this quarter (revenue, cash, burn, headcount, whatever the fund collects). Filed by quarter rather than overwritten, so the trend exists when a partner asks.
What the review works from those figures
Revenue this quarter against the same quarter last year is growth, $3,000,000 against $2,000,000 is 50%; cash over monthly burn is runway, $5,000,000 at $400,000 is 12.5 months; headcount against last quarter is the team's change; and ownership times the mark against cost is the position, 12% of $60,000,000 is $7,200,000, 1.8x on $4,000,000. The review sheet builds the quarter from nine inputs and publishes no benchmark for any of them.
Where the record stops
The company's cap table, its next round, its option pool and its own books are the company's and its counsel's, and the cap-table and startup ventures' on this estate. The fund's investor relations, the capital it calls and the update it sends the LPs, are the relationship venture's at rapportvo.com. This record is the fund's view of the holding: cost, ownership, mark, KPIs and the review.
Many portfolio companies, one shape
A venture fund's forty holdings report in forty shapes, and the point of keeping the record is that they land in one: the same four figures per company per quarter, the same review sheet, the same position arithmetic at the fund's mark. The portfolio analytics worksheet then reads the book as a whole, gross, realised and unrealised, concentration and losses, from the same record. Every figure on this page is the worked example's.
Questions people ask about what is a portfolio company
What is a portfolio company, in one sentence?
A company a fund has invested in and now holds, kept in the fund's record with its cost, the fund's ownership, the fund's mark and the KPIs it reports each quarter.
How is the fund's position in a portfolio company worked?
Ownership times the company's value at the fund's mark, against cost: 12% of $60,000,000 is $7,200,000 on the worked example, 1.8x on $4,000,000. The mark is the fund's own input.
Does LPreportly keep the portfolio company's cap table?
No. The cap table, the rounds and the option pool are the company's record and another venture's subject. LPreportly keeps the fund's view: cost, ownership, mark, KPIs and the quarterly review.