Venture Cash Flows

Change to all Venture Capital Models, from 12/6/2023 to 12/18/2023:

• Edited Get Started to create new calculation of invested capital if using assets under management as the base for any period in calculating management fees. Previously the model relied on circular references to calculate fees and create a schedule of called capital, but that method sometimes failed to work reliably because of how iterative calculations work to resolve circulars. Now, if the model observes any option other than committed capital used in any period on the Forecast sheet, it will alter the estimate of invested capital so that it does not create a circular. Creating this consisted of (a) a new subcalculation routine on the Forecast sheet that calculates assets under management as a percentage of invested capital given the capital deployment strategy and investment strategy (expectations of writeoffs and exits), (b) modifications to the forecast of invested capital to allow the option to use circulars, now a checkbox on Forecast sheet, (c) removal of the manual adjustment to the invested capital introduced in most model versions this month, and (d) a new method used to forecast invested capital on Get Started. The forecast of Invested Capital is still doing the same thing (committed capital - expenses - management fees + recycled capital) but now it's using a lot more subcalculations for management fees to make it work. Now, you can select management fees to use committed capital at any point in the fund life, and the model will adjust, without requiring circulars (the option to use circulars remains as a backup). In most cases the model will result in called capital = committed capital, in some cases in the Venture Capital Model if you are not recycling 100% of management fees called capital can be calculated slightly less than committed capital due to the difficulty in estimating the budget for management fees.
• Edited Get Started and Forecast to make the model a bit smarter about handling expense overruns. Now the model will reduce distributions to handle any unbudgeted expenses, as well as call capital around recycling a bit differently. Changes to Called Capital per period, Management Fees Recycled per period, and Proceeds available for distribution (in the Waterfall) lines.
• Edited Get Started and Forecast to build new way to forecast operational expenses. Previously model assumed operational fees were not charged to the fund in the extension period, after the initial fund operations period, if the fund was not yet exited out of all investments. Now by default it does estimate that period and use that for budgeting for operational expenses.

Currently I'm working on updating the Portfolio Construction approach used in the Venture Capital Model to streamline the math and make it possible to handle using assets under management seemlessly, and hope to have that complete in early January.