Assessing Transparency in Fund Allocation

𝗠𝗼𝘀𝘁 𝗳𝗶𝗿𝘀𝘁-𝘁𝗶𝗺𝗲 𝘀𝘁𝘂𝗱𝗶𝗼 𝗟𝗣𝘀 𝗺𝗶𝘀𝘂𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝘄𝗵𝗲𝗿𝗲 𝘁𝗵𝗲 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝗴𝗼𝗲𝘀. And when they do understand... they wonder if it's efficient. That's why we've created the VSCSM framework, which breaks down studio capital deployment into five categories: 1. 𝗦𝘁𝘂𝗱𝗶𝗼 𝗦𝗚&𝗔 (15-25% allocation) 2. 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗕𝘂𝗶𝗹𝗱𝘀 (10–35% Allocation) 3. 𝗜𝗻𝗶𝘁𝗶𝗮𝗹 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻 (0–10% Allocation) 4. 𝗣𝗿𝗶𝗺𝗮𝗿𝘆 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 (30–50% Allocation) 5. 𝗙𝗼𝗹𝗹𝗼𝘄-𝗢𝗻 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 (0–20% Allocation) These 5 categories tell us where studio money goes and what the standard capital allocation is for each bucket. 𝗟𝗲𝘁'𝘀 𝗮𝗽𝗽𝗹𝘆 𝘁𝗵𝗶𝘀 𝗺𝗼𝗱𝗲𝗹 𝘁𝗼 𝗮 𝗵𝘆𝗽𝗼𝘁𝗵𝗲𝘁𝗶𝗰𝗮𝗹 𝘀𝘁𝘂𝗱𝗶𝗼 𝘄𝗶𝘁𝗵: - $10M Fund - 3 years of newco building, 7 years of support - 10 total B2B SaaS portfolio companies - $1M/year operating budget initially, $100k/year hold - $25k common + $500k preferred per build - $1M total follow-on reserve 𝗦𝗼 𝗵𝗼𝘄 𝗱𝗼𝗲𝘀 𝘁𝗵𝗮𝘁 $𝟭𝟬𝗠 𝗴𝗲𝘁 𝘂𝘀𝗲𝗱? 1. 𝗦𝘁𝘂𝗱𝗶𝗼 𝗦𝗚&𝗔 $740K over 3 years or $74K per company. Roughly 20% of total fund. 2. 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗕𝘂𝗶𝗹𝗱𝘀 $2.96M across all builds, $296K per company. Bulk of operational budget. 3. 𝗜𝗻𝗶𝘁𝗶𝗮𝗹 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻 $300K total or $30K per company to secure early equity. 4. 𝗣𝗿𝗶𝗺𝗮𝗿𝘆 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 $5M total or $500K in preferred equity per build. 5. 𝗙𝗼𝗹𝗹𝗼𝘄-𝗼𝗻 $1M reserve or $100K reserve per company (though unevenly used in reality). The final all-in cost per company: ~$900k (excluding follow-ons). 𝗕𝘂𝘁 𝗵𝗲𝗿𝗲'𝘀 𝘄𝗵𝗲𝗿𝗲 𝗶𝘁 𝗴𝗲𝘁𝘀 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴: - Total Studio Cost per Company = $900K (SG&A, Builds, Initial Cap) - Average Equity Stake = 45% (25% common + 20% preferred) - Cost Per Equity Point = $20,000 Most VCs need much more than $20K to secure 1% ownership (especially with no operating load.) The studio also runs lean, with a Studio Scalability Ratio of 1.25:1 (10 companies supported by 8 staff). 𝗧𝗵𝗲 𝗞𝗲𝘆 𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆 𝗜𝗻𝘀𝗶𝗴𝗵𝘁: 37% of deployed capital goes to operating the studio, while traditional funds aim for ~20%. This transparency gives LPs what they rarely get in venture: a true cost basis for startup equity formation. So... is ~$900K worth securing 45% of each newco with dedicated resources and an active building model? That's the capital efficiency debate at the heart of the venture studio model.

In-Depth Look: ECBonds Fund Allocation Among Top Three Political Parties A recent dive into the Election Commission's (EC) latest bond issuance and redemption figures has revealed an unexpected discrepancy: more bonds have been redeemed than were originally issued. Detailed Insights: Data Cross-Verification: Upon closely examining the alignment between donor contributions and the recipient's top three political parties, inconsistencies in bond ID matching across EC's records were evident. Discrepancy in Figures: Analysis revealed 18,871 transactions in the purchase list against 20,241 in the redemption records. Ideally, these figures should align or indicate fewer redemptions, contradicting the observed data. Identifying Gaps: The missing bond numbers in purchase documentation, yet appearing as redeemed, suggest inadvertent possible oversights. Seeking Collective Insight: This preliminary analysis aims to highlight and address potential anomalies. While I've exercised due diligence, the complexity of data might harbour overlooked details. Hence, I invite feedback, insights, or alternate interpretations from the community. Your expertise can provide invaluable perspectives or validate the findings, ensuring our collective understanding and the integrity of electoral finance monitoring. Engagement Appreciated: Your thoughts, feedback, or any supplementary analysis would be greatly appreciated to enhance the accuracy and depth of this investigation. #ECBonds #FinanceAudit #TransparencyInPolitics

The Private Funds Rule Implication # 3: Fund Expenses The new quarterly statements which must be delivered by managers of private funds (hedge funds and private markets vehicles) do not only focus on performance. The SEC has also mandated that the quarterly statements include a detailed presentation of all fees charged to each fund and therefore paid by investors. There are three categories of fees which will now be reported every quarter: 1) All expenses paid by the fund 2) All expenses paid by the fund to the manager 3) All expenses paid by underlying portfolio investments to the manager (inclusive of affiliates). For the first category, general expenses at the fund level, per the SEC: “the rule captures all fund fees and expenses allocated to or paid by the fund during the reporting period, including, but not limited to, organizational, accounting, legal, administration, audit, tax, due diligence, and travel expenses. The rule’s capturing of all, rather than limited categories of, fund fees and expenses is appropriate because this requirement will encompass the various and evolving forms of private fund fees and expenses. Advisers must list each category of expense as a separate line item under the rule, rather than group fund expenses into broad categories that obfuscate the nature and/or extent of the fees and expenses borne by the fund. For example, if a fund paid insurance premiums, administrator expenses, and audit fees during the reporting period, a general reference to “fund expenses” on the quarterly statement will not satisfy the rule’s detailed accounting requirement. Instead, an adviser is required to separately list each category of expense (i.e., in the example above, insurance premiums, administrator expenses, and audit fees) and the corresponding total dollar amount.” We wholeheartedly welcome this greater level of transparency around fees. First, investors will be able to identify the specific fees paid by each fund in their portfolios. At present, investors do not receive granular transparency - Castle Hall has found, for example, that over two thirds of fund audited financial statements aggregate costs as “other expenses” without further breakdown. Second, investors will be able to aggregate total fees paid across their portfolios. Have pensioners whose capital accumulates into a $100bn public pension plan, for example, actually paid for $7.8m of private plane travel - let alone $143m of legal fees - allocated from their hedge and PE investments? Boards of trustees will now have data to review the costs of their investments - and a fiduciary duty to determine whether the payment of these fees is actually in the best interests of their members. As, of course, every dollar which goes in fees is a dollar less which is available to pay beneficiaries. #odd #duediligence #sec #privateequity #transparency

🌍 How transparent are climate funds? The pressure is on to meet the new $300 billion climate finance goal by 2035. How can we tell if we’re on track? And how do we know that climate finance is effective, efficient and equitable? 🔎 To answer these questions, transparency is vital.   Multilateral climate funds play a key role in channelling these resources. Our latest research, Better Data for Better Outcomes, examines the transparency of the four largest climate funds, Green Climate Fund, Global Environment Facility, Climate Investment Funds - CIF, and Adaptation Fund, which collectively manage nearly $50 billion in pledged funding. Our key findings: ✅ These funds share good financial and project-level data on their own websites. ⚠️ However, only one (GEF) publishes open data in the International Aid Transparency Initiative Standard. 🚧 This lack of standardisation hinders comparability with other climate, development, and humanitarian finance, making it harder for stakeholders to coordinate efforts and track impact. We recommend that all climate funds enhance their transparency by: 🔹 Aligning with international reporting standards 🔹 Publishing granular, accessible data 🔹 Improving disclosures on project results, implementing partners, and funding allocations Greater transparency means better coordination, more effective spending, and ensuring climate finance reaches those who need it most. At Publish What You Fund, we’re committed to driving this change and are keen to work with climate funds to make it happen. See the detailed findings here: https://lnkd.in/ecDy6RX7    #ClimateFinance #Transparency #COP29 #SustainableFinance Climate Policy Initiative International Institute for Environment and Development (IIED) Eurodad - the European Network on Debt and Development ODI Global Center for Global Development E3G SEEK Development - Strategic and Organizational Consultants International Institute for Sustainable Development Bank Information Center Bretton Woods Project Climate Bonds Initiative Climate Action Tracker ClimateWorks Foundation

Executive directors hiding funding issues? It happens more than you think. I've seen a nonprofit leader who rarely cashed paychecks to help with finances. And another who took out personal loans to donate to the organization. While these actions stem from good intentions, they often create more problems than they solve. Here's why: 1. Hiding financial struggles prevents boards from fully understanding the organization's health. This limits their ability to provide strategic guidance and support. 2. Leaders forgoing paychecks can lead to burnout and resentment. And of course, there are some labor law issues, putting the nonprofit at risk. 3. Personal loans to the organization blur professional boundaries and can create conflicts of interest. By concealing financial realities, leaders unintentionally make it harder for boards to provide effective oversight and support. This lack of transparency can erode stakeholder trust and hinder the organization's ability to address challenges proactively. This is why I advocate for a culture of openness in nonprofit financial management: - Regular, detailed financial reports to the board - Open discussions about fundraising challenges and successes - Clear policies on executive compensation and benefits Implementing these practices offers several benefits: 1. Improved decision-making: With accurate financial information, boards can make more informed strategic choices. 2. Enhanced donor confidence: Transparency builds trust, potentially leading to increased donations and long-term supporter relationships. 3. Better resource allocation: Understanding the true financial picture allows for more effective budgeting and program planning. 4. Stronger partnerships: Open communication about finances can lead to more productive collaborations with other organizations and funders. By fostering a culture of financial transparency, we're creating an environment of trust and collaboration. This allows nonprofits to focus on their core missions without the burden of hidden financial stress. Remember, transparency isn't just about sharing numbers – it's about creating a culture of honesty, accountability, and shared responsibility for the organization's financial health. What steps is your nonprofit taking to increase financial transparency?