Tear sheets

What is a tear sheet?

A tear sheet is a one-page document that summarizes key financial information about a company. Also known as a “fact sheet,” it provides current and potential investors with a concise overview of key performance metrics, business strategy, and other relevant information in a simplified format.

The name “tear sheet” comes from the days when stockbrokers would tear a sheet out of their summary books to give to prospective investors as a stock recommendation. Today, tear sheets are used by private equity firms, venture capitalists, and hedge funds to highlight their portfolios and deliver quarterly or monthly updates to limited partners (LPs).

A tear sheet may include:

• Company overview: Provides a brief overview of the portfolio company, industry, and business model. 

• Financial metrics: Includes revenue, EBITDA, cash flow, gross margin, valuation, and burn rate.

• Recent performance: Highlights major milestones, new partnerships, product launches, growth trends, and market changes.

• Investment details: Outlines the initial investment date, ownership stake, any follow-on investments, and exit potential.

• Market analysis: Assesses the market size, competitive positioning, and industry trends.

• Management team: Profiles the founders, executives, and leadership team. 

• Risk assessment: Identifies potential risks or challenges faced by the company.

Existing investors use tear sheets to stay informed about portfolio company and fund performance. Potential new investors often evaluate multiple opportunities at the same time, so tear sheets need to effectively summarize and display the most important details for quick comparison. 

How to create a tear sheet

LPs want a tear sheet with basic information to help them model scenarios and figure out what the top deals are. To be effective, a tear sheet should be:

• Concise: Avoid excessive detail while highlighting the most important information.

• Visual: Include charts, graphs, and tables to present performance data in a format that's easy to understand.

• Standardized: Follow a typical format to make it easier for investors to compare multiple term sheets.

• Dynamic: Update it regularly to reflect current performance and strategic changes.

 The easiest way to get started is to build from an example or 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

• Executive team

• 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.

Start small

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.

Incorporate feedback

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.