4.2 – Portfolio Management
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Portfolio Management
Portfolio management is one of the most critical — and ongoing — responsibilities of a venture capital firm.
Once a startup joins the portfolio, the work doesn’t stop. In fact, it often ramps up. Good portfolio management can mean the difference between a company that struggles and one that becomes a fund-returning success.
So what exactly is portfolio management? At its core, it’s the process of monitoring, supporting, and making strategic decisions about the companies you’ve invested in.
Let’s break this down into the key parts.
1. Monitoring Performance
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VCs track each portfolio company’s progress through regular updates, board meetings, and financial reports.
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This includes revenue growth, customer acquisition, product milestones, hiring, and cash burn.
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The goal is to spot red flags early and identify opportunities for growth.
2. Supporting Founders
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Portfolio management is not passive. The best VCs actively help founders succeed.
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This might mean making introductions to customers, helping recruit key executives, offering guidance on fundraising, or sharing best practices from other portfolio companies.
3. Strategic Decision-Making
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Mid-to-senior level investment role, often considered “partner-track.”
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Leads due diligence, negotiates deals, and manages portfolio companies with less supervision.
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Carried Interest: Typically smaller, around 1–5%, with potential increases in future funds.
4. Governance and Oversight
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Entry-level role, heavily focused on research, data analysis, and supporting the investment process.
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Helps track market trends, monitor competitors, and maintain databases.
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Carried Interest: Rarely included; comp is mostly salary + bonus.
5. Exit Planning
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Focuses on adding value after the investment is made.
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Helps portfolio companies with hiring, marketing, business development, and operations.
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Carried Interest: Can range from none to 1–3% for senior platform leaders in firms that highly value this role.
The Big Picture
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Portfolio management is about protecting and growing the fund’s investments.
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It blends analytics, relationships, and strategic judgment.
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Done well, it increases the odds that the fund’s winners become truly transformative — for the company, the VC, and the LPs.
