4
Fundraising

Attribution Letter

Asked by:
Community Member
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Jun 22, 2023
Which track record metrics being reported to LPs would require attribution letter and which metrics do not?
1 answer
Accepted Answer
Jun 22, 2023
All of your previous work at a venture capital fund, including the performance of the portfolio, is normally the intellectual property of that venture capital firm and can not be used without explicit consent. Consent is granted by securing a signed attribution letter from the venture capital firm. 

Additionally, performance track record is a closely guarded secret in the venture capital industry. Funds do not want their track record shared, and also portfolio companies do not want their performance shared. As a result, securing an attribution letter to share past performance is important from both a legal and an ethical standpoint.
This seems very extreme to me. I understand not being able to talk about the fund performance and even specific company performance in terms of mark-ups, IRR etc. However, if a departing partner sourced, led, managed the deal and deals were won only b/c a that partner was on it, why isn't this part of a GP's personal track record? (especially if the founders will strongly vouch for that GP). And if that partner was the one who accompanied certain deals, including board roles, if those companies sign off on that GP's involvement, why can't that be considered part of the GP's personal record?
Community Member
Jun 24, 2023 12:55pm
I hear you Netalie. It is a tough and difficult situation. This is because the GP was working for the fund and future LPs will need to diligence that what they said about those investments is in fact true. They will call the previous fund even if the GP does not put them down as a reference. This is especially true with large ticket LPs. In addition, the fund may not be comfortable with the GP disclosing the details such as valuations and markups etc... With regards to the founders the GP can use quotes. They can also mention that that the GP was on boards.
Jun 24, 2023 2:34pm
I agree that it is not possible to directly use all the metrics of a previous fund when raising a new one. However, if someone has established a corporate venture fund from the ground up, including sourcing, due diligence, and investment decisions, they will likely have a track record that they can use to attract LPs? Additionally, someone who wears both the LP and GP hats in a multi-CVC fund will have a deep understanding of the industry and be able to provide valuable insights to potential LPs.
Community Member
Jun 26, 2023 1:20am
You have to assume that sophisticated LPs will do an enormous amount of diligence on you. They will call the company to verify whatever claims you are making with regards to your accomplishments at the CVC. Also, it's not as relevant that you established the CVC unless you can mention the performance of your efforts.
Jun 26, 2023 1:39am
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