Modelling LP position in funds

Hi - Firstly, not sure if this is the correct forum, so please redirect if required. Posted here as assuming Hedge Funds take LP positions (which is why I haven't posted this in PE/RE/VC as the topics are focused on LBO's/Assets/Start-Ups)

I currently work in real estate investment, typically single asset and small portfolios and have this down in terms of underwriting/modelling.

However, we are going to look at taking an LP position in some smaller RE and VC funds and I am at a bit of a loss as to how to model them.

At a high level, the capital is going to be locked up for circa 5yrs, before possibility of distributions. In that time there will be the periodic fees, cap calls, tax etc.

Resultantly, How would you model an LP position? How simple/complex does it get, or really have to be? Given the risk exposure and unpredictability of something like VC, is the focus more on fund manager, track record and that kind of DD rather than plugging a million assumptions into model?

Any suggestions and guidance welcome! 


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Aug 13, 2022 - 4:44am
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