An innovative venture capital firm was in the process of structuring a new fund. The firm needed a way to determine the optimal distribution structure of the different future cash flows to various stakeholders (entrepreneurs, investors and general partners), taking into account risks.
EpiX Analytics worked together with the managing director of the firm and different outside experts to determine the risks on individual investments as well as the overall portfolio. EpiX then developed a comprehensive Monte Carlo model that simulated the investment performance, and related various cash flow streams.
The model helped the managing director better understand the risks to each of the stakeholders involved under different fund structures and scenarios. The results of the model supported the decisions on how to structure the fund, and gave investors a quantitative view of risk and return.
The fund successfully raised money, has used its unique investment model now for over 6 years and has invested in a wide variety of attractive opportunities.