Kate Simpson

So, yes, we are obsessed with fun math.

We, you know, when we reach a certain stage of diligence with a manager we're excited about, we build our own model, which we call the what you need to believe model.

So essentially we've developed some internal metrics and a framework to evaluate what

a fund's size relative to the number of positions in the fund, relative to the ownership targets, and then importantly, the reserve strategy.

So how much capital is going in at that first check versus later stages at, of course, higher or what we hope to be higher valuations.

We want to see, assuming a realistic range of outcomes,

a path to 5X.

And this is, you know, particularly when we're evaluating small early stage funds, object times seed stage funds.

We want to see how many single deal outcomes are needed to return the fund.

We want to see how much market cap creation is needed to return multiples of the fund.

This is so we don't have to have heroic assumptions.

And that's what I meant when I said we don't have to squint to see a realistic path to a 5X fund.

It helps us compare small funds that have different strategies and maybe different portfolio constructions of their own.

It helps us compare apples to oranges, so to speak, in the industry.

And it's important because we assess hundreds of managers every year.

Many of them have similar portfolio construction and philosophies, but there's always nuances and differences.

So this gives us a framework to compare different funds against a similar set of metrics.

If you think of venture, right, you're investing in very young companies and startups.

Not all of them are going to become winners, right?

Like venture is an asset class of many losses and fewer wins.