Portfolio Management - Performance Cases | support.carta.com

Performance Cases

What are Performance Cases?

When underwriting an investment, managers typically build multiple cases for each investment for e.g., Low Case, Base Case, Upside Case - and each case might have different funding and exit profiles. These cases are assigned a probability and a weighted average probability across all the cases is computed to determine expected returns and follow-on reserves for each deal.

Why is this important?

Managers usually model multiple risks simultaneously in their underwriting process:

• Funding Risk: risk of a company not able to raise subsequent funding rounds
• Market Risk: risk that exit valuations or future round valuations may not be as expected
• Timing Risk: risk that a company takes far longer to reach desired performance levels than expected

By evaluating a weighted probability profile for the investment - managers can better determine reserves needed and expected returns for each deal. And as the investment matures, these case probabilities can be adjusted or tweaked to continuously monitor the investment risk.

Adding New Performance Cases

• Click on + Add Case
• Define the case i.e. change the rounds for this case (graduations, exit values) to match your expectations
• Enter the probability for case

How many cases can an investment have?

Each investment must have at least 1 case defined. You can have up to 10 cases each investment.

How are Case Probabilities different than Graduation Rates?

Case Probabilities are simply the likelihood of the entire case occurring. Graduations Rates are the probability of an event occurring within a case. For e.g., you may want to put a 40% probability for an investment graduating from the Seed to Series A case for the Base Case, and a 70% probability of the same event occurring in the Upside Case.

With cases, managers can now fully model all expected investment performance profiles for each investment - and see return results on their fund's dashboard.

Common actions

When working with multiple performance cases you might come across situations where you want to quickly clone, copy or make changes to one performance case based on others.

Each performance case has a Actions section that provides access to common scenarios .

• Description: Enter a text-based description for this case
• MarketIntel: Access comps on round sizes and valuations from market data
• Future: Add future rounds from an existing Sector Profile. Tactyc will add future rounds after the last historical actual round
• Clone: Clone all the rounds from another performance case to the current performance case
• Sync: Replace the current historical rounds (i.e. any rounds that occur in the past) with the historical rounds from another case. This is useful if the portfolio company raised a new round and you want to update this across all your performance cases. Simply add this new round to one case, and then sync the other cases with this case.
• 100%: This will set all the round graduation rates to 100%
• Results: Shows a summary of all performance related metrics related to this case (MOICS, investment levels, status etc.)
• Notes: Lets you add a note specific to this performance case.