A tear sheet is a one-page summary document that contains key financial information about a company, including an overview of the company, leadership, and services. Also known as a “fact sheet”, the name “tear sheet” comes from an old practice where stockbrokers would tear a sheet out of their summary books to give to prospective investors as a stock recommendation.
Venture capitalists create tear sheets about each of their portfolio companies and send them to their limited partners (LPs) on a quarterly or monthly basis to help them understand investment performance.
How to create a tear sheet
LPs want a tear sheet with basic information to help them run scenarios and figure out what the top deals are. The easiest way to get started is to build from an example of a tear sheet or to use a tear sheet template.
Tear sheet example
We’ve created an example tear sheet you can download to give you a sense of what LPs expect.
Carta’s tear sheet example includes:
An overview of the company
History of investments
Financials (revenue, cash burn, balance sheet, liabilities, etc.)
A section for your own commentary
Download an example tear sheet
Keep in mind that you don’t need every field we’ve included. In fact, you may want to pare down the information in the beginning and add more over time. If you’re a Carta fund administration client who subscribes to our Portfolio Insights feature, we’ll create customized quarterly tear sheets for your investments.
Tear sheet tips
We talked to Catherine Chen, a partner at Lightspeed Venture Partners, to get advice for putting together a tear sheet.
Make your tear sheet scalable
Chen says it’s important to make sure your tear sheets are scalable. (Remember: you’ll have to create one tear sheet about each of your portfolio companies every month or quarter, which takes time.) “You don’t want to have to manually enter everything,” she explains.
To save time, Chen recommends starting small. Begin by offering the basic data you think your LPs want to see. “You don’t want to start with open floodgates that give them too much information upfront,” she says.
Finally, gather feedback from your LPs and make the necessary changes. “It’s easier to add later on than it is to delete.” Chen says. So start with a basic tear sheet, and build up over time. Certain industries in your investment strategy might have specialized KPIs and benchmarks, or some of your LPs might request data related to their ESG commitments or market capitalization.
Have additional questions? Reach out to learn more about fund administration at Carta. If you’re already a Carta fund admin client, you can request a demo of our Portfolio Insights feature.
DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. (“Carta”). This communication is for informational purposes only, and contains general information only. Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.
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