Chapter 11
Reporting
LP Reporting & Communication
Reporting Cadence: Quarterly financials + monthly/quarterly letters
Year 1–2 IR Strategy: Transparency, momentum signaling, Fund II positioning
Year 1-2 of investor relations is where emerging asset managers prove they’re not just good at picking companies, they’re good stewards of other people’s money. After the first close, LPs judge you less on hype and more on cadence, clarity, and controls: do you report on time every quarter; do your numbers reconcile; do you explain what’s working and what isn’t; and can an auditor, consultant, or LPAC member find what they need without emailing you twice? Cluster 12 is your playbook for running IR like an operating system, not a scramble, so you build trust now and set up clean re-ups for Fund II.
We’ll anchor your program to a predictable quarterly schedule and a pack that’s easy to ingest: a two–three page management letter, financials that tie out, and supplemental materials LPs can lift straight into their own systems. We’ll calibrate tone for 2025: transparent over perfect, forward-looking without hand-waving, and specific about how your work shows up in portfolio KPIs. You’ll also see how to narrate early-fund performance (the J-curve years) with context, not spin, and how to turn monthly touchpoints into signal, not noise.
Operationally, we’ll outline the audit you should plan for, the artifacts that reduce diligence ping-pong such as valuation policy, performance workpapers, benchmark memos, and the internal roles and SLAs that keep the engine humming. Finally, we’ll plant the seeds for Fund II: which proof points to highlight, how to use founder caselets and LPAC governance to build confidence, and the cadence that makes follow-on commitments a default, not a debate.
If you follow this chapter step-by-step, your IR will feel boring in the best possible way: on time, consistent, and credible, exactly what re-ups are made of.
The Quarterly Reporting Standard
Timing
Institutional LPs expect a drumbeat they can set their own workflows to. Publish a 12-month reporting calendar on day one and stick to it:
- Q1 results: by April 30
- Q2 results: by July 31
- Q3 results: by October 31
- Q4 results (audited year-end): by February 28 of the following year
These are not statutes; they’re widely accepted targets that match how LP back-offices close their books and how consultants batch reviews. The non-negotiable is consistency. If an item will finalize later such as an audit footnote or a late portfolio valuation, release the pack on time with a clear “Preliminary Items” box and a scheduled refresh date. Don’t hold the whole report to perfect every line.
Operationalize the cadence
Owner + SLA: Assign a single report owner and document internal SLAs, internal sign-off by T+40, LP distribution by T+45–60 for Q1–Q3, and T+90–120 for audited Q4.
Timezone & cut-off: State the timezone, file-naming convention, and cut-off rules such as events after the quarter close but before issue date appear in “Subsequent Events”.
Version control: Use a “v1.0 (Prelim)” → “v1.1 (Final)” scheme, keep a one-page Change Log, and avoid breaking links in your VDR.
LPAC heads-up: Brief anchors/LPAC 3–5 business days before release if there’s material bad news; it reduces email churn after distribution.
Holiday buffers: If a deadline falls on a market holiday, pre-announce the one-business-day shift in your calendar so no one is surprised.
Distribution checklist: Post to the VDR, email the notice with a three-line summary with deployment, performance, cash, and include the next report date in the email footer.
Core components
Management Letter
Lead with a one-paragraph executive summary, for example, deployment, cash, highlights, lowlights), then four sections:
- Portfolio update: 5–8 company snapshots with dated events such as pilot signed, down round, key hire, plus a mini table of ARR, growth %, burn multiple, NDR, or sector-specific KPIs.
- Deployment & reserves: commitments this quarter, cumulative invested %, remaining dry powder, reserves by company.
- Risk & liquidity: valuation moves and drivers; customer or regulatory risks; cash runway by cohort; any lines of credit usage.
90-day look-ahead: IC calendar, likely follow-ons, expected capital calls/distributions.
Use the same metric definitions and units every quarter. Add a top-right “What changed vs. last quarter” box and a one-line status for prior watch items.
Financial Statements
Include: balance sheet; schedule of investments with cost, fair value, method, and change QoQ; statement of operations; statement of partners’ capital (capital accounts roll-forward).
Provide a fees & expenses note that reconciles to ILPA v2.0 categories with management fee, org costs, fund admin, audit/tax, transaction expenses, broken-deal, internal chargebacks, offsets/waivers.
Add policies for valuation frequency/approver, FX treatment, and revenue recognition where relevant. Deliver PDF + XLSX so LP back-offices can ingest without rekeying.
Supplemental Materials
Company KPI one-pagers: latest metrics, variance vs. plan, and your interventions.
Valuation memo excerpt: method, comps/inputs, calibration notes; link to full policy in /04-Policies.
Reserves plan & pipeline: follow-on triggers, checkpoint dates.
ILPA Performance Template: net & gross shown with equal prominence for the same periods; include calculation notes so figures tie to financials.
Optional but useful: cohort charts by vintage or sector, customer concentration, and a glossary with formulae or data sources.
Emerging asset manager reporting tone (2025 best practices)
Lead with transparency, not spin: If a company missed a milestone, state it plainly and attach the fix: “Q2 pilot slipped 60 days; we added two design partners, extended runway three months, and moved GA to Q4.” Publish a brief “risks & mitigants” table each quarter so issues aren’t buried. This matches QRSI’s push for clarity and makes consultant reviews faster.
Explain the why, not just the what: Pair every number with a driver. If ARR rose 18%, say what caused it (pricing change, channel launch, reimbursement approval) and whether it’s repeatable. If gross margin fell, name the input and the corrective action. Close with a 6-12 month outlook: expected hiring, catalysts, reserve usage, and exit readiness gates.
Pre-brief bad news: When you foresee a down round, covenant breach, or governance change, call anchors/LPAC 3–5 business days ahead. Share a one-pager with the scenario, options you evaluated, decision criteria, and timeline. Then reference that call in the letter. Early, direct communication builds trust and reduces post-release churn.
Show your operating fingerprints: Add short, dated vignettes of value you provided: “2025-05-08: introduced payer X → pilot signed 2025-06-12,” “2025-07-03: recruited interim CRO,” “2025-08-21: redesigned pricing; NDR +9 pts.” Keep them to two lines each and tie to KPI movement where possible.
Keep style consistent and scannable: Use the same headings every quarter (Portfolio, Deployment/Reserves, Valuation & Risk, Outlook), a one-box “What changed vs. last quarter,” and metric definitions that never drift. When you update a methodology, flag it in a change log and show the bridge. Authentic, repeatable structure > glossy prose, and it’s what re-ups are made of.
Your Year: 1-2 performance narrative
Typical Fund I optics: early MOICs are “optically low” while capital is still being deployed, often ~0.5-0.7x in Year 1, rising toward ~0.8-1.2x in Year 2 as the portfolio forms; IRRs are back-loaded to realizations. Use Cambridge Associates materials to frame peer-context and the long J-curve arc, and always cite whether figures are gross or net.
Make the story simple and repeatable:
- Deployment: “On pace with thesis; X investments this quarter; reserves policy unchanged.”
- Milestones: “Three companies hit >$1m ARR; one signed a strategic pilot; one down-round re-plan underway.”
- Early standout: “Company A leading indicators (NDR, pipeline) suggest an outlier.”
Tie your commentary to the ILPA Performance Template fields so numbers reconcile without LP guesswork.
Year-1 operational milestones to communicate
- Q1 2025: Admin live, banking and capital-call processes tested, reporting calendar published; >50 companies screened; 1-2 initial investments closed.
- Q2 2025: 2-3 incremental investments; first cases of board/observer seats; KPI instrumentation live across portfolio.
- Q3-Q4 2025: 4-6 total investments; pattern recognition emerging; early exit signals tracked; Fund II narrative begins in your close-of-year letter (not a raise, just the story foundation).
Publish this as a one-page “Operating Plan & Cadence” and track to it.
Fund II groundwork
Narrative building: Your quarterly consistency plus 2-3 crisp case studies is more Fund II-persuasive than any slogan.
Communication system: Annual meeting, a predictable quarterly pack, and an end-of-year note that summarizes deployment math, DPI/TVPI path, and hiring/bench scale-up.
Social proof: Where appropriate and accurate, update third-party data, for example PitchBook/Crunchbase firm pages) after closing, so allocators can triangulate your progress.
Audit process (Year-1 essentials)
Target fieldwork in January, draft in February, and issue alongside your Q4 pack by Feb-28/Mar-15. Build a mini-Gantt with owners: admin trial balance (T+10 days), valuation memos (T+15), cap-account rollforward (T+18), audit testing window (T+20–40), partner review (T+45–55).
Who to hire. Big Four, Deloitte, EY, KPMG, PwC, bring brand and global coverage; mid-market specialists often move faster on emerging-fund files and cost less. Choose a team with private-fund ASC 820 experience, carry or waterfall testing chops, and international depth if you have foreign LPs/holdcos. Ask for: team bios, relevant reports issued in the last 12 months, and independence representations.
Cost & drivers. Planning bands of $20k-$100k+ depend on number of entities or LPs, international tax needs, valuation complexity, and the state of your books. Fix scope in the engagement letter: statements to audit, US GAAP or IFRS, materiality thresholds, interim review needs, timeline SLAs, and who pays for overruns tied to late PBCs.
What auditors test
Valuations (ASC 820): methods, inputs, calibration, observable vs. unobservable hierarchy, subsequent-events procedures.
Capital & carry: capital calls, fees/offsets, waterfall recomputation, partner capital rollforwards, management-fee basis.
Expenses: allocation policies, vendor confirmations.
Existence/rights: bank confirms, safekeeping, SPV/holdco docs.
Related parties & side-letters: completeness and financial impact.
Process & artifacts
Admin delivers trial balance + GL detail; you provide valuation memos, fee/carry schedules, subscription/side-letters, and Board/IC minutes. Expect management-representation letters at issue. Tie the audited statements to your ILPA Reporting & Performance Templates so LPs can reconcile.
Audit-readiness kit
PBC checklist with owners/dates.
Valuation policy and two sample memos.
Fee & expense policy with a waterfall test file.
Books & records index.
Monthly communication cadence
Option A – Formal monthly newsletter (short). One page: portfolio KPI snapshots, what changed, asks/thank-yous, and the next 30-day plan.
Option B – Casual check-in. A two-paragraph email on notable events and upcoming IC topics.
Option C – Quarterly + Annual only. If resources are tight, publish only quarterlies plus an annual letter—but be hyper-reliable and responsive to inbound.
Whatever you choose, make sure timing and format appear in your IR SOP so everyone on the team executes consistently.
How to write the quarterly Management Letter
Keep it to 2–3 pages. Use the same headings every quarter:
- Portfolio overview. New/Follow-on investments; reserves and pacing; cash position.
- Company snapshots. 4-8 bullets across the portfolio with material updates, not marketing gloss.
- Valuation & risk. Methodology notes, any model changes, and a table of measurement dates and approvers.
- Outlook (90-180 days). Hiring for the fund, memos in process, IC calendar, and expected capital calls.
Make the letter read like a consistent operator log. It should tie out to ILPA’s Reporting and Performance Templates so LPs can reconcile your words to the numbers.
Financials & templates
ILPA’s Reporting Template and the companion Performance Template were developed throughout 2024 and released in January 2025 to standardize quarterly reporting, particularly fees/expenses, carried interest mechanics, and performance presentations after widespread consultation with LPs/GPs. It makes your pack plug-and-play for LP back-offices and consultants.
Clearer breakouts for internal chargebacks vs. external expenses; more granular expense categories; and consolidated carried-interest reconciliation embedded with capital accounts, details LP ODD teams care about.
Marketing Rule alignment
The SEC Marketing Rule (206(4)-1) applies to ads in any channel as decks, websites, emails. If you show gross performance, you must show net side-by-side with equal prominence, for the same period and using a consistent methodology. Keep workpapers that substantiate every material claim about performance, testimonials, or third-party ratings. Build these rules into your slide templates and review checklists.
For hypothetical/target returns, label conspicuously, include assumptions, and restrict distribution to appropriate audiences per your policies. Keep the underlying workbook and approvals in your books and records.
Your quarterly “supplemental” section
- Company KPI one-pagers. ARR, growth, gross margin, NDR, burn multiple, time-to-value, plus 2-3 dated interventions you led such as enterprise intro, pricing experiment.
- Valuation summary. Methods by company, who approved, and dates aligned with your written policy.
- Reserves heatmap. Initial vs. current plan; triggers to release or re-allocate.
- Risk watchlist. The 3-5 items you’re actively managing (regulatory, dependency, churn.
- Glossary & calculation methods. To prevent metric drift across quarters.
Every artifact should reconcile back to ILPA line items.
Sample quarterly outline
Cover: fund name, quarter, reporting date, disclaimer
Page 1: executive summary (deployment, cash, highlights, lowlights)
Pages 2-3: portfolio snapshots (KPIs + interventions + outlook)
Pages 4-6: financial statements (GAAP/IFRS excerpts) + ILPA v2.0 Reporting Template extracts
Page 7: performance table + ILPA Performance Template excerpt (net & gross with equal prominence)
Page 8: reserves plan & pipeline
Appendix: valuation policy excerpt; side-letter MFN note if relevant; glossary
First two years: what LPs will evaluate
Timeliness & accuracy
Publish on a fixed calendar and never miss it. Distribute Q packs that tie out numerically, no “to be supplied” lines lingering for weeks. Use ILPA Reporting & Performance Templates so fee/expense fields, capital-account rollforwards, and performance lines drop straight into LP systems. Add a change log (“v1.0 prelim → v1.1 final”) so updates are transparent.
Consistency of story and numbers
Your management letter, financials, and dashboards must reconcile line-by-line. If you say “two follow-ons executed,” the cash movement and cost basis should appear in the schedule of investments; if you cite ARR growth, the KPI sheet should show the same figure and driver. Lock metric definitions (ARR, NDR, burn multiple) in a glossary to prevent drift across quarters.
Audit readiness
Keep a live PBC checklist with owners and due dates. For each marked company, maintain a short valuation memo such as method, inputs, calibration, subsequent events that ties to the fair-value change. Pre-compute the carry/waterfall and ensure fees/offsets match the LPA. Respond to auditor queries within two business days and track resolutions in a log.
Comparative context
LPs compare you to peer cohorts. Don’t chase early-period MOIC optics; show the bridge to DPI: reserves policy, follow-on gates, time-to-next round/exit waypoints, and buyer maps. Include a simple cohort view (by vintage/sector) and a 12-24 month outlook with catalysts. The managers who retain and re-up are the ones who explain variance crisply, hit dates reliably, and make every figure easy to verify.
Table of Contents
- LP Reporting & Communication
- The Quarterly Reporting Standard
- Core components
- Emerging asset manager reporting tone (2025 best practices)
- Your Year: 1-2 performance narrative
- Year-1 operational milestones to communicate
- Fund II groundwork
- Audit process (Year-1 essentials)
- Monthly communication cadence
- How to write the quarterly Management Letter
- Financials & templates
- Marketing Rule alignment
- Your quarterly “supplemental” section
- Sample quarterly outline
- First two years: what LPs will evaluate
- How to Fundraise Your First Fund in 2025
How to Fundraise Your First Fund in 2025
How to Build a “Bankable” Investment Thesis for Your First Fund (2025 Edition)
US Marketing Rule 2025: What Fund Managers Can Say (And Can’t) About Performance
Fund Structure 2025: Choosing Between 506(b), AIFMD, and ELTIF 2.0
EU Fundraising Decoded: AIFMD Passport, NPPR, ELTIF 2.0 & the 2026 Deadline
The 2025 LP Data Room Checklist: ILPA-Aligned Architecture for Emerging Managers
Secondaries & Continuation Funds Explained: What LPs Expect You to Know (2025)
Where Emerging Managers Find LPs in 2025: Family Offices, FoFs & Private Wealth
Building an Unfair Advantage: Emerging Manager Sourcing, AI Workflows & Operations
From 200 Prospects to First Close: Fundraising Funnel Math & Benchmarks
The First-Fund Closing Checklist: Legal Docs, Operations, and Capital Call Lines
Mastering the Fundraising Close: Sales Psychology, Rejection, and Momentum Building
Mastering the Fundraising Close: Sales Psychology, Rejection, and Momentum Building