How to forecast fund cash flows

Also: March performance in public and private markets; Don't miss our emerging tech deep dives from Q1; Watch our free ESG and sustainability webinar!

Read online | Don't want to receive these emails? Manage your subscription. PitchBook Log in The Research Pitch April 2, 2022 March's madness. What happened in the markets last month? What datasets do our analysts look at to make sense of it all? Our monthly digest (now available to everyone!) tracks trends and returns across dozens of indexes and sectors: check it out Industry expertise. Our emerging tech analysts have released all of their Q1 research, with deep dives into the sectors across our growing scope of coverage. Non-clients can access free previews of the research: Agtech AI & Machine Learning Fintech Foodtech Healthtech, Enterprise Healthtech, Retail Information Security Insurtech Internet of Things Mobility Tech Supply Chain Tech Helping allocators better forecast cash flows and manage commitment pacing For any investor that has added or is thinking of adding a private market allocation, the challenges can be daunting. From manager selection to complicated fund terms to performance evaluation, there are many obstacles to deal with. Two related issues that we have spent a lot of time thinking about are cash management and commitment pacing. Currently, there are limited tools available that help allocators navigate the liquidity and commitment pacing challenges that can occur when building and maintaining a private fund portfolio. Modeling fund cash flows and setting an optimal commitment schedule are often tasks left to rudimentary, rule-of-thumb models. A lack of robust datasets is a clear impediment to building comprehensive tools. The issue is not trivial. Poor cash management and misappropriated commitments can make a sizable difference in the return profile of the entire portfolio. Enter PitchBook’s Allocator Solutions: Cash Flow Forecasting and Commitment Pacing. In our new report, we break down the methodologies we use to assist clients in managing a private market portfolio. Leveraging our historical data on fund cash flows, we build empirically based, probabilistic forecasts and scenario analyses tailored to unique private fund portfolios. Our simulation generator allows allocators to view their portfolio's cash flow profile in a new way, allowing for the measurement of potential cash flow breakeven points like in this single-fund example:   Click for a bigger view of a simulated cash flow profile. Additionally, our commitment pacing tool allows allocators to set optimal investment schedules using historical fund NAV profiles as a base:   Click for a bigger view of a simulated NAV profile. All this, and more, is available to PitchBook clients in our Excel-based template. Our analysts are ready to assist in customizing the solutions to your particular portfolio. Download our free research: Allocator Solutions: Cash Flow Forecasting and Commitment Pacing If you are interested in learning more, please reach out to our research team. As always, please let us know if you have any feedback or questions.   Best regards, Zane Carmean, CFA Quantitative Research Analyst Webinars & Events Click to see a big version of this slide from our webinar.   Sustainable investing and ESG continue to carve out a niche in the investing landscape. But this growth hasn't been without ambiguity or a lack of consensus on what they are and how they operate. This week, our analysts hosted a free webinar on the prevailing sustainable investing philosophies, the groups behind them, and how this intersects with topics like greenwashing: watch the replay. PE podcasting: Senior analyst Rebecca Springer led a discussion this week about the rapidly evolving behavioral health industry and how PE is approaching the space. Listen here. Commentary Senior foodtech analyst Alex Frederick weighs in on MycoTechnology's $85 million Series E round led by a group affiliated with the Oman Investment Authority: "This is the third-largest VC deal of a fermented fungi food company on record. "MycoTechnology has multiple food projects in development, including B2B alt-protein, adaptogenic, and functional ingredients. It also sells alt-protein meat and dairy products through its consumer brand, Goodside Foods. "Funding will be used to bring new products to market and reach new markets in Europe, Asia and the Middle East. "Fungi is genetically much closer to animals than plants and can lend meat-like characteristics to alt-protein foods. "Fermented fungi-based ingredients are increasingly being used to develop alt-protein products or used as ingredients to enhance the sensory qualities of plant-based and cultivated protein products. "The fermented protein category raised $1.8 billion in 2021, up 126.2% YoY. "The fermented protein category is more nascent than plant-based proteins. However, it will play a critical role in the scaling production of alt-proteins and developing products that better mimic animal meats."   Alex Frederick Senior Emerging Technology Analyst Foodtech & Agtech In the News Our insights and data featured in the press: "Though blockchain technology is far from maturity, broad conceptual and technical underpinnings are taking shape, accelerated via increasing investor participation." [City A.M.] Some VCs are shifting their focus and funds away from AI to Web3 and DeFi. [Fortune] Biotech startup fundraising has been resilient, but investors are selective. [WSJ Pro] Despite the record-setting value and amount of VC deals in fintech last year, momentum stalled during Q4. [Business Insider] If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team. ICYMI Highlights from our other recent research: Market updates Greater China Venture Report US PE Middle Market Report US VC: Bracing for Change Global Real Estate Report Thematic research Do VC Industry Specialists Outperform? The Growing Prominence of US PE Mega-Deals and Exits Analysis of Public US PE Firm Earnings ESG, Impact and Greenwashing in PE & VC Healthtech Partnership Tracker Coming next week (subject to change) PitchBook-NVCA Venture Monitor: First Look PitchBook Benchmarks Analyzing the rise of VC micro-funds Analyzing the latest with SPACs and introducing PitchBook's deSPAC Index Thanks for reading! Feel free to email us any time with feedback, questions, or tips! Learn more about the PitchBook Institutional Research Group, meet our analysts, or access our research libraries for clients and non-clients. Were you forwarded this newsletter? Sign up at pitchbook.com/subscribe. 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