It’s a Sunday night and an associate at a venture fund is still copying numbers into a spreadsheet. She started after lunch. There are thirty-one portfolio updates in her inbox and they all look different, so she has been going back and forth between email tabs and the sheet for hours, and she still has eleven to go. One company reports revenue by product. Another reports it by “motion,” whatever that means this quarter. A third just sent a screenshot of a dashboard, and the screenshot cut off half the labels. It gets treated as a reporting problem, a template problem maybe, and the fix is usually a new spreadsheet. But a lot of it goes back further than that, to how each of those companies named its products and organized itself in the first place.
The naming problem behind the numbers
When two companies’ numbers don’t line up, there is often a naming story behind it. A startup launches a plan called Teams. A year later it adds Teams Plus. Then there’s a pricing change and both get renamed and nobody writes down what happened, so the finance lead who joins six months later has three names in the billing system for what is basically two products. Another company sells the same product under different names in different markets. One name for US customers, another for the UK, and a third one their hospital clients use because procurement asked for it. So the brand is unclear about what is a product and what is a tier and what is an add-on. Finance picks up that confusion. And then the fund gets it in the quarterly update. A new template doesn’t solve this. The template asks for revenue by product line and each founder fills it in based on whatever they think a product line is.
What I mean by shared identity
Companies in a portfolio can and should look different from each other. What helps is a common way of thinking about structure underneath that. There is a parent brand, there are products under it, the tiers relate to each other in some clear way, and when a new product comes along there is already an obvious place to put it. Startups that sort this out early end up with cleaner numbers without trying very hard. The products in the deck are the same products in the billing system and on the pricing page. When the fund asks for revenue by product there is one answer. A few funds now push their companies toward this as part of platform support. Getting Brand Architecture for VC-Backed Companies right sounds like design work, and some of it is. But the people who end up most thankful for it are often in finance, because their reporting gets so much easier.
Funds do this too
Funds are not much better with their own structure. A firm might have Fund I and Fund II, an opportunity fund, a scout program and a handful of SPVs from 2021 that nobody likes talking about. Each of those gets described a little differently depending on whether it’s in an LP letter or on the website or in some internal deck. LPs pick up on that. If an LP wants to compare how the vehicles are doing, first they have to figure out what the fund means by each name, and every time they have to do that there is a chance they get it wrong. When a firm picks one structure and uses the same names everywhere, its data gets a lot easier to read. The quarterly report uses the names the website uses. The dashboard groups things the same way the annual meeting deck does. It sounds like a small thing but it saves a lot of back and forth.
Definitions matter more than they seem
Accountants care a lot about definitions and there is a good reason for it. Take the word customer. For one company it means a paying account, for another it means a seat, and for a third it includes pilots that never turned into contracts. Put six companies like that on one chart of customer growth and the chart doesn’t really mean anything. Some funds send out a one-page glossary for portfolio reporting, covering what counts as ARR, how pilots should be handled and when a product is considered launched. The data that comes back is much better. This works best when the companies already have a clear structure of their own. A founder who knows how their products fit together can match them to the fund’s categories in a few minutes. A founder who doesn’t will guess, and the guesses add up over a year.
Software can only do so much
Tools have gotten a lot better. A fund can pull every update into one place automatically now, follow the same metrics across all its companies and see a company getting into trouble before it turns into a serious problem. With clean inputs, good Portfolio Insights for VC Firms can show cohort comparisons by stage or sector, flag burn problems early and give partners a pretty honest view of which companies are driving returns. With messy inputs you get charts that look confident and are built on categories that don’t match. I would argue that’s worse than no chart. Software can clean up formats. What it can’t do is decide for a founder whether Enterprise is a product or a pricing tier, and that decision is where most of the mess starts. One thing I have noticed with these rollouts is that the funds getting value in the first year are mostly the ones that took a few weeks to agree on labels before they turned the platform on. The ones that skipped that step have a nice dashboard that nobody opens.
Habits that help
The first one is easy. During onboarding, ask each new company to put its product structure on one page, then keep that page and ask them to update it when things change. Use the same names everywhere. If the opportunity fund has an official name then that is the name in the LP letter, on the website and in the dashboard, and not a nickname in one place and an acronym in another. Last, treat a rename as a small reporting event. A short note to the platform team when a company renames something can save someone a confusing afternoon a few quarters later.
What changes
Nobody is going to write a press release about the quarter their portfolio data finally lined up. But the associate gets her Sunday back, and partners going into the annual meeting can answer LP questions without digging through backup slides. Portfolio companies get something out of it too. A startup that knows how its products fit together is easier to explain to customers, to people it’s hiring and to the investors in its next round. The fund mostly wanted cleaner data, and the founders end up with a company that’s simpler to understand.
