TLDR:
- Secretive FinTech company, Portend, conducted discussions with VCs on their due diligence practices.
- Majority of VCs do not regularly check portfolio company bank statements or enforce information rights.
Secretive FinTech company, Portend, recently engaged in discussions with Venture Capital and Private Equity firms to examine their due diligence practices regarding portfolio companies. The company, known for providing real-time due diligence services, raised concerns about how Investment Directors and VCs handle their responsibilities towards protecting shareholder value amidst a frothy investment market. In a survey of 100 firms, it was revealed that a significant portion of VCs do not regularly check portfolio company bank statements or enforce information rights post-investment.
Julie Cunningham, Founder of Portend, pointed out that the survey results highlight the challenges faced by portfolio managers in effectively monitoring their portfolios due to workload constraints. It was emphasized that the adoption of real-time due diligence services will become essential in identifying areas where VCs can provide timely assistance to avert potential crises.
Richard Abrahams, Co-CEO of Sprout, echoed the importance of understanding a fund’s portfolio status, especially in the current complex funding landscape. He emphasized the necessity for funds to proactively manage and add value to their portfolios to maintain both financial and reputational integrity.
Portend’s decision to depart from its secretive stance to address the shift in GPs’ understanding of real-time due diligence and LPs’ awareness of portfolio management aligns with the evolving nature of the industry. The company aims to provide continuous due diligence services to Venture Capital firms to prevent avoidable incidents in start-ups and ensure the protection of shareholder value.
