Seed Fund Portfolio Construction for Dummies

  • Make sure your portfolio construction aligns with power law shaped distribution returns
  • Your initial strategy is just a starting point. It must be measured and adjusted over the life of the fund.
  • Getting recycling right at seed is challenging. Use a holistic model that pulls in everything to optimize your chances. 🔥We’ve included a downloadable version of ours below🔥

Choosing your initial strategy

Here’s me preparing to write this post

Portfolio construction must be dynamic

If your strategy isn’t dynamic it can lead to big issues

Driving with a single holistic model is key

  • On the Summary and Assumptions tab, you can change the investment variables and view a summary of the fund’s current and predicted metrics.
  • The Portfolio tab pulls in these variables to create a hypothetical portfolio, which can be updated with real data as you make investments.
  • The Model tab then takes this hypothetical portfolio and creates a cash flow model, the results of which are summarized on the Summary and Assumptions tab.
  • Fund name, size, and start date (cells D9:D11)
  • Expected number of investments (cell D102)
  • Average size of expected investments (cell D101 for the initial check, cells K102:K105 for follow-ons)
  • Predicted conversion rate between each round (cells K111:K114)
  • Frequency of investments and follow-on rounds (cells K118:K123)
  • Fund fees and expenses (cells C141:C151)
Thanks for reading the whole thing!

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Eniac Ventures

Eniac Ventures

We lead seed rounds in bold founders who use code to create transformational companies.

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