LPs (limited partners) are often detached from the day-to-day operations of their funds’ portfolio companies. This can make it difficult for them to gauge the performance of their investments. A fund manager, known as a GP (general partner), can remove some of this ambiguity with regular LP updates providing insights into portfolio performance.
We spoke to a handful of GPs to get their advice on the best approach to LP updates. Here’s what they had to say:
It’s Your Job to Share Updates
LPs trust you to invest their money wisely. They deserve to be informed on the status of those investments. It helps them evaluate their portfolio and plan for the future.
“Updates keep LPs informed, show active monitoring of the investment, and they’re a great tool to connect with investors—which becomes more difficult as a syndicate or fund grows.” —Ashley Flucas, GP, Flucas Ventures
Good LP Updates Lead to More Capital
Connecting with LPs leads to more trust, and more trust will make LPs want to invest with you in the future. Good GPs can foster a loyal network of LPs who are eager to participate in their deals.
“Sharing LP updates has absolutely helped me raise more capital. Thorough, high-quality updates builds trust between GPs and LPs. LPs are likely more willing to back future funds of managers that regularly share updates.” —Ryan Hoover, GP, Weekend Fund
Send an LP Update At Least Once Per Quarter
Fund managers we spoke with recommend sending LP updates at least quarterly. Reach out to founders of your portfolio companies a few weeks prior to each update to ask what you can share. If something important happens between updates, share it in real time (after checking with the founders). If founders come to you with a problem, offer to share it with your LP network to see if they can provide solutions.
“Our LPs aren’t just people who write checks, but subject matter experts in their own fields. Given the breadth and diversity of their own portfolios, we routinely turn to LPs to provide feedback. Often they provide insight into a particular challenge we didn’t have an answer for.” — Jeff Adelson-Yan, GP, Third Prime
Lead With What’s Most Important
What you share in your LP update should be determined by what founders greenlight and what matters most to your investors. Most LPs are busy people. It’s fine to write long updates, but tell them what they need to know upfront.
“I always start with what I think is most material to my LPs: revenue, major deals or milestones, follow-on rates, and press coverage.” —Ashley Flucas, GP, Flucas Ventures
Be Quantitative and Qualitative
Product data, sales velocity, and financials should be part of every LP update. It’s the GP’s job to put that information into context for LPs. Explain why you think a company is performing well or failing to meet expectations. If you added a new company to the portfolio since the last update, tell LPs what the company does, the team behind it, and why you chose to invest.
“When introducing new portfolio companies to LPs, it's important to share your thesis and reasoning for investing. Are they capitalizing on an emerging consumer behavior or technology shift? Have you known the founders for many years and can you share evidence of their superpowers? What unique insight does the team have on their market? Ideally you can teach and inspire LPs when introducing new companies.” —Ryan Hoover, GP, Weekend Fund
If an investment fails, be transparent with LPs about why it didn’t work out. Lead with data and offer a few sentences on where the company ran into trouble (assuming you’re able to share). Most LPs know angel investing is inherently risky. If you’re always painting a rosy picture, LPs could lose trust in what you tell them.
“We give it to LPs straight, whether it’s good or bad. This ultimately makes for a better relationship. If we didn’t share our failures, LPs would think we’re not opportunistic and we’re not taking enough risks.” —Jeff Adelson-Yan, GP, Third Prime
Share Updates Asynchronously
It’s best to provide updates via email, PDF, Google Doc, or some other form of asynchronous communication. This gives LPs the ability to review and respond in their own time. (AngelList GPs can use the Posts function to securely send updates to all members of their syndicate or fund.)
“We send a short email that links to the full update in Google Docs. Asynchronous consumption is ideal for most busy LPs.” —Ryan Hoover, GP, Weekend Fund
LP Update Template
There are many ways to structure an LP update. Ryan Hoover uses the following format:
- Intro highlighting new investments, emerging trends, and intel on how the investment strategy is evolving.
- Markups on companies that have raised since the last update.
- Portfolio snapshot including the company name, description, website URL, category, and applicable fund invested through.
- Portfolio additions including the amount invested, why the investment was made, what the company does, background on the founder and team, and coinvestors in the deal.
- Portfolio updates including new product releases, press, company blog posts, and “asks” from the founders.
We’ve added a link to Ryan Hoover’s LP update template in Posts, inside the Lead Dashboard. Simply click the link to view the template, and apply it to streamline your own LP updates.