Performance Evaluation Framework of VC funds

Thesis / Finance and Investing

Performance Evaluation Framework of VC funds
Sanil Subhash Chandra Bose, Member, Entrepreneur, India

Performance evaluation and improvement Framework for Venture capital firm using Balanced Score Card and Scenario planning

The venture capitalist firm consist of mainly two partners, the general partners who manage the fund and limited partners who really invest in the business. The VC firm pool the money from different limited partners and invest in different business according the potential and financial requirement. One of the main problem facing VC firms are the evaluation and improvement criteria of portfolio companies and performance of the fund that VC firms invested. This evaluation framework will help the limited partners to evaluate the performance of general partners which in-turn improves the retention rate of general partners. 1) Evaluation framework The objective of this module is to study 4 measures of the company; financial measures, customer measures, process measures, learning and growth measures. This framework can be used to evaluate the growth of the portfolio companies which is an effective measurement tool for VC firms to evaluate the growth after certain period of time. The balanced score card approach can be used for the evaluation of the company. 2) Improvement framework The objective of this module is to suggest alternatives to the companies and fund which are not performing well. Scenario planning can be used to analyze different growth alternatives.

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