ResourcesThe Fund One HandbookChapter 11
Chapter 11

LP Reporting & Communication

Systematic LP reporting in Years 1-2—quarterly standards, management letters, audit readiness, and the communication cadence that builds Fund II credibility.

16 min read
9 sections

This chapter establishes a systematic approach to LP reporting during Years 1-2. The central thesis: consistency, transparency, and operational rigor are the foundations for Fund II credibility. LPs evaluate emerging managers not just on returns, but on communication quality—predictable reporting signals institutional readiness.

Quarterly Reporting Standard

Establish fixed deadlines and stick to them. LPs benchmark managers against peers on timeliness:

Q1

April 30

45-60 days post-quarter

Q2

July 31

45-60 days post-quarter

Q3

October 31

45-60 days post-quarter

Q4

February 28

Audited financials

Internal Process Controls

  • Single report owner with documented SLAs
  • Version control: v1.0 Prelim → v1.1 Final with change log
  • LPAC heads-up 3-5 days before bad news

Core Report Components

Management Letter (2-3 pages)

  • Executive summary: deployment, cash, highlights, lowlights
  • Portfolio update: 5-8 company snapshots with dated events
  • Deployment & reserves: commitments, invested %, dry powder
  • Risk & liquidity: valuation moves, risks, cash runway
  • 90-day look-ahead: IC calendar, follow-ons, capital calls

Financial Statements

  • Balance sheet, schedule of investments (cost, fair value, QoQ change)
  • Statement of operations and partners' capital
  • Fees & expenses reconciled to ILPA v2.0 categories
  • PDF and XLSX formats

Supplemental Materials

  • Company KPI one-pagers
  • Valuation memo excerpts
  • Reserves plan & pipeline
  • ILPA Performance Template (net/gross equal)

Emerging Manager Reporting Tone

The most successful emerging managers lead with transparency, not spin:

Lead with transparency, not spin
Pair every number with drivers
Pre-brief bad news to anchors/LPAC 3-5 days ahead
Show operational value with dated vignettes
Consistent, scannable style quarter over quarter

Consistency matters more than perfection. LPs prefer predictable, honest updates over polished but sporadic communication.

Year 1-2 Performance Narrative

Acknowledge typical J-curve dynamics and set realistic expectations:

0.5-0.7x

Typical Year 1 MOIC

0.8-1.2x

Typical Year 2 MOIC

Narrative Framework

  • Use Cambridge Associates for peer context
  • Simple story: deployment, milestones, early standouts
  • Tie to ILPA Performance Template

Audit Process

Timeline

January

Fieldwork

February

Draft circulation

Feb 28 / Mar 15

Final issuance

Auditor Selection

  • Big Four or mid-market with ASC 820 experience
  • Cost: $20k-$100k+ depending on complexity

Testing Focus Areas

Valuations
Capital/carry mechanics
Expenses
Existence/rights
Related parties

Audit-Readiness Kit

  • PBC checklist
  • Valuation policy
  • Fee/expense policy

Monthly Communication Options

Choose a cadence that matches your resources, then stick to it:

Option A

Formal Monthly Newsletter

1-page newsletter with portfolio KPIs, notable events, and asks.

Option B

Casual Check-in

2 paragraphs on notable events as they occur.

Option C

Quarterly + Annual Only

Hyper-reliable quarterly reports plus annual meeting (if resource-constrained).

Consistency matters more than frequency. Pick a cadence and never miss a deadline.

ILPA Templates

Reporting Template and Performance Template finalized January 2025

Clearer separation of internal chargebacks vs external expenses
Consolidated carried-interest reconciliation
Standardized performance metrics presentation

Marketing Rule Alignment

SEC Marketing Rule Requirements

  • Gross requires net side-by-side with equal prominence
  • Keep workpapers substantiating claims
  • Hypothetical/target returns: label, assumptions, restrict distribution