Backsolving to find an ideal portfolio

Can Tactyc solve for ideal construction parameters?

Some GPs would like to set a target performance benchmark (such as TVPI or IRR) - and perhaps have Tactyc generate an “ideal” portfolio for them.

If this sounds good to be true - it is! The reality is that there could be an infinite number of “solutions” to this multi-variate problem. Check sizes, graduation rates, exit assumptions, fees, expenses, recycling assumptions - they all play a part in arriving at the final portfolio. Even if we iterate over millions of possible solutions there is no way for a system to make a decision on which is the optimal parameter set from millions of solutions.

Secondly, we believe the process of portfolio construction is at times more important than the end result. By taking the time to play with different assumptions, GP’s can develop an intuition of which levers really move the needs and where their model is most sensitive. We believe this is important for not just the theoretical process of fund construction - but also for actual portfolio management once the fund is launched.

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