Performance Indicators Tracked by GPs and LPs

Why it is smart to start investing in the stock market?

Lorem ipsum dolor sit amet, consectetur adipiscing elit lobortis arcu enim urna adipiscing praesent velit viverra sit semper lorem eu cursus vel hendrerit elementum morbi curabitur etiam nibh justo, lorem aliquet donec sed sit mi dignissim at ante massa mattis.

Neque sodales ut etiam sit amet nisl purus non tellus orci ac auctor
Adipiscing elit ut aliquam purus sit amet viverra suspendisse potenti
Mauris commodo quis imperdiet massa tincidunt nunc pulvinar
Adipiscing elit ut aliquam purus sit amet viverra suspendisse potenti

Should I be a trader to invest in the stock market?

Vitae congue eu consequat ac felis placerat vestibulum lectus mauris ultrices cursus sit amet dictum sit amet justo donec enim diam porttitor lacus luctus accumsan tortor posuere praesent tristique magna sit amet purus gravida quis blandit turpis.

Odio facilisis mauris sit amet massa vitae tortor.

What app should I use to invest in the stock market?

At risus viverra adipiscing at in tellus integer feugiat nisl pretium fusce id velit ut tortor sagittis orci a scelerisque purus semper eget at lectus urna duis convallis. porta nibh venenatis cras sed felis eget neque laoreet suspendisse interdum consectetur libero id faucibus nisl donec pretium vulputate sapien nec sagittis aliquam nunc lobortis mattis aliquam faucibus purus in.

Neque sodales ut etiam sit amet nisl purus non tellus orci ac auctor
Adipiscing elit ut aliquam purus sit amet viverra suspendisse potenti
Mauris commodo quis imperdiet massa tincidunt nunc pulvinar
Adipiscing elit ut aliquam purus sit amet viverra suspendisse potenti

Is it risky to invest in the stock market? If so, how much?

Nisi quis eleifend quam adipiscing vitae aliquet bibendum enim facilisis gravida neque. Velit euismod in pellentesque massa placerat volutpat lacus laoreet non curabitur gravida odio aenean sed adipiscing diam donec adipiscing tristique risus. amet est placerat in egestas erat imperdiet sed euismod nisi.

“Nisi quis eleifend quam adipiscing vitae aliquet bibendum enim facilisis gravida neque velit euismod in pellentesque massa placerat.”

Tell us if you are already investing in the stock market

Eget lorem dolor sed viverra ipsum nunc aliquet bibendum felis donec et odio pellentesque diam volutpat commodo sed egestas aliquam sem fringilla ut morbi tincidunt augue interdum velit euismod eu tincidunt tortor aliquam nulla facilisi aenean sed adipiscing diam donec adipiscing ut lectus arcu bibendum at varius vel pharetra nibh venenatis cras sed felis eget.

General Partners (GPs) and Limited Partners (LPs) rely on performance indicators (KPIs) to assess the viability and success of their investments. These KPIs offer a quantitative measure of investment performance, thus enabling better decision-making processes. ScaleX Invest, through its SaaS solutions, provides investors with valuation methods adapted to technology companies, including multiples, to effectively track their portfolios. Here is an overview of the KPIs tracked by GPs and LPs.

Internal Rate of Return (IRR)

Gross IRR

Gross IRR is a crucial indicator for GPs as it measures their gross investment capacity by calculating the rate of return on invested capital before taking fees, expenses, and commissions into account. This indicator reflects the GP's ability to generate returns from the invested capital, providing a clear picture of investment performance. However, this indicator can be misleading if compared between funds or investments without considering differences in fee structures, as it does not account for incurred costs, which can significantly impact net returns for LPs.

Net IRR

Net IRR, on the other hand, is essential for LPs as it takes all fees and expenses into account, reflecting the actual return on the capital invested by LPs. This indicator is fundamental at the fund level as it provides a realistic view of the returns that LPs can expect after all costs are deducted. However, it can vary considerably depending on the provisions for commissions, fees, and expenses. Moreover, it is less informative at the beginning of a fund's lifecycle due to the J-curve effect, where investments may show negative returns.

Multiple on Invested Capital (MOIC)

MOIC is a key multiple for assessing a GP's performance. It measures the total value generated from the invested capital, highlighting the fund's ability to choose profitable investments. A clear advantage of MOIC is its ability to provide a simple indication of overall return without the distortion of time. However, it can be less informative about the efficiency of capital use over time, as it does not take investment duration into account.

Additionally, MOIC can be divided into realised and unrealised MOIC. Realised MOIC measures the returns from liquidated investments, while unrealised MOIC evaluates the current value of active investments. Together, they offer a complete view of past performance and potential future gains.

Total Value to Paid-In Capital (TVPI)

TVPI is a critical indicator that measures the total value created relative to the capital paid in by LPs, thus offering an indication of the fund's ability to maximise returns. TVPI's strength lies in its ability to reflect both realised and potential future returns, making it a comprehensive measure of a fund's performance. However, TVPI can sometimes be inflated by unrealised gains that may not materialise. As with MOIC, the duration of investments is not considered, which constitutes a limitation.

Residual Value to Paid-In Capital (RVPI)

RVPI measures the theoretical value of active investments in the fund. This indicator is important at the beginning of the fund's lifecycle as it provides an estimate of future returns. However, it must be considered with caution as it accounts for unrealised value. Excessive reliance on RVPI can lead to an overestimation of a fund's performance.

Distributions to Paid-In Capital (DPI)

DPI measures the capital actually returned to LPs compared to the capital paid in. This indicator is crucial at the end of the fund's lifecycle as it reflects the realised value of investments. DPI is advantageous as it provides a direct measure of cash returns for LPs and is essential for evaluating the success of exits and the overall performance of the fund. However, focusing solely on DPI neglects the potential value of active investments (RVPI).

Net Asset Value (NAV)

This indicator is essential for GPs and LPs to assess the health and value of the portfolio. The main advantage of NAV is that it provides an instant snapshot of the current value of the portfolio, which is crucial for monitoring and comparing with other investment opportunities. Like RVPI, NAV can be influenced by the subjective valuation of unrealised investments.

Proceeds

Proceeds refer to the distributions from the total or partial liquidation of investments. This indicator is crucial for assessing the returns generated by investments. Proceeds offer a direct measure of the success of exits.

Conclusion

For technology investors, tracking these KPIs is crucial for making informed decisions and optimising investment strategies. ScaleX Invest's solutions allow investors to have accurate and relevant data, enabling them to assess opportunities and effectively value their portfolios. By leveraging these KPIs, GPs and LPs can maximise the return on their investments.

ScaleX Invest provides a solid analytical framework for technology investors, ensuring that they have the necessary tools and insights to navigate a particularly dynamic ecosystem.