Instead of focusing on lagging indicators like revenue, GPs and LPs should review portfolios by asking what key uncertainties (market, product, tech) have been resolved. This provides a more accurate leading indicator of a company's progress and potential.
In the past "SaaS factory" era, TVPI was a strong predictor of cash returns (DPI). Today's portfolios contain more companies with deep technical and capital-raising risks, making TVPI a potentially misleading "false signal" that inflates paper value.
Many VCs, especially at the seed stage, rely heavily on intuition or "vibes." This methodology is a stark departure from the structured, analytical frameworks common among public market and hedge fund investors, highlighting a significant cultural and process gap within the investment world.