Precursor Fund III Financial Model

• Precursor leads pre-seed rounds of $1M or less - one of the few institutional firms willing to lead and set terms at this stage.
• Investment thesis: bet on founders before there is product-market-fit data; occupies the "low data on business, low familiarity with founders" quadrant that other firms avoid.
• Value-add beyond capital: help founders syndicate rounds, coach on fundraising, on-demand operational support (hiring, co-founder conflict, strategy).
• Community of 300+ founders across portfolio.
• Deep relationships with top seed and Series A firms to facilitate follow-on financing.

Venture fund economics - standard LP/GP structure:

• Fund size: $40,000,000 (Fund III).
• Fund I: $15,300,000. Fund II: $31,300,000.
• Reserves/follow-on: Fund III uses a "Reserves Fund only" structure (replaces SPVs used in Funds I & II) to follow on in winners.
• SPV income (Funds I & II): used SPVs to syndicate follow-ons; Fund III eliminates SPVs in favor of an integrated reserves fund.

All numeric KPI values on the Fund I and Fund II summary dashboards (slides 11, 18) and the portfolio snapshot tables (slides 13, 20, 22, 23) are redacted (blacked out in source images). The following numbers ARE visible in the deck text:

Fund I:

• Fund size: $15,300,000; closed 2016
• Portfolio size: 83 companies
• Initial check: $150,000
• Target ownership: 1–3%
• Strategy: 20–25 companies/year; pre-seed ~65%, seed ~35%

Fund II:

• Fund size: $31,300,000
• Portfolio size: 95 companies
• Initial check: $250,000
• Target ownership: 4–6%
• Follow-on: $250K second investment proactively offered between initial check and next round
• Strategy: pre-seed ~60%, seed ~40%

Fund III:

• Fund size: $40,000,000
• Portfolio size target: 75 companies
• Initial check (pre-seed): $250,000; initial check (seed): $400,000
• Target ownership: 4–6%
• Target total invested per company pre-Series A: $500K–$750K
• Portfolio composition: pre-seed 75%, institutional seed 25%
• Pacing: 20–25 companies/year
• Follow-on: proactive capital outside of round; Reserves Fund (not SPVs)

Sector distribution (combined Funds I & II):

• Fund I: B2B Software 30%, Consumer 23%, Marketplaces 15%, Digital Health 10%, Hardware 8%, Fintech 7%, Media 7%
• Fund II: Consumer 34%, B2B Software 31%, Digital Health 10%, Marketplaces 8%, Fintech 6%, Hardware 4%, Media 4%, EdTech 2%, Consumer SaaS 1%

Co-investor network:

• YC is the most frequent seed co-investor (13 companies); Bloomberg Beta (9); Homebrew, Founders Fund, First Round (5 each)
• Series A–C: YC (9 companies), a16z (4), Founders Fund (3)

Founder demographics:

• Female founders: Fund I 25%, Fund II 45%
• Ethnicity: Fund I White 61%, Asian 19%, Black/AA 15%, LatinX 5%; Fund II White 55%, Asian 27%, Black/AA 12%, LatinX 3%

Deal sourcing (Funds I & II combined):

• Other VCs 43%, Portfolio Founders 17%, Friends 15%, LPs 13%, Accelerators 3%, Non-Portfolio Founders 3%, Other 3%, Precursor Employee 3%

Standout Fund I portfolio companies: The Athletic (Series D), Clearbanc (Series B), Incredible Health (Series A), Carrot (Series B), Juniper Square (Series C), Finix (Series B), Superhuman (Series B), AnyRoad (Series A)

Standout Fund II portfolio companies: Runa (Series A), Modern Health (Series B), Noyo (Series A), Passport (Series A), DriveTime (Series A)

All per-investment numeric data (MOIC, DPI, TVPI, loss rates, markup multiples by stage) are redacted in the dashboard and table slides. Structural parameters visible:

• Initial check size (Fund III): $250K pre-seed / $400K seed
• Target total exposure per company (Fund III): $500K–$750K
• Target ownership at entry (Fund III): 4–6%
• Implied avg. entry valuation at ownership target:
• Fund I / Fund II MOIC: redacted in images

• Positions against top seed funds that have grown to $100M+ (Felicis, Forerunner, Lerer Hippeau, Floodgate, Uncork, Crosscut, Eniac, Freestyle) - argues those funds have migrated up-stage, creating a pre-seed vacuum.
• Differentiation: willingness to lead and set terms (not just participate) at pre-seed; community of 300+ founders for support; no requirement for business metrics at entry.
• Moat: co-investor network (YC, a16z, Founders Fund, First Round) validates deal quality; deal sourcing via other VCs (43%) and portfolio founders (17%) creates compounding referral flywheel.
• No direct competitor named - competition framed structurally (angel / friends-and-family below, seed funds above).

Team:

• Charles Hudson (GP): Stanford BA Economics, Stanford MBA. Founded two companies. Prior: Google, IronPort, Gaia, Serious Business. Investor at Uncork Capital (SoftTech VC), Active Angel, In-Q Tel.
• Sydney Thomas (Partner): Duke BA Public Policy, Berkeley-Haas MBA. Operator at Naya Health, Kimberly Clark, Soma Water.
• Ayanna Kerrison (Partner): Baruch College BA Finance. Prior: Credit Suisse, Bank of Montreal, Merrill Lynch.
• Portfolio team grid shown on slide 2 (individual names not OCR'd).

Funding ask:

• Raising $40,000,000 for Fund III from LPs.
• No stated LP minimum, close date, or current close amount shown.

Use of funds (implied from strategy):

• 75 companies × ~$250K–$400K initial check = ~$19M–$30M in initial investments
• Remaining ~$10M–$21M allocated to follow-on reserves fund for pro-rata / opportunistic follow-ons in winners
• Management fees drawn from committed capital

This is a VC fund LP pitch, not an operating startup. The correct model is a VC fund economics / waterfall / cash-flow model - not a 3-statement operating model.

• Archetype + why: VC Fund Economics model (J-curve cash flow + waterfall). Models capital deployment, portfolio construction, MOIC/DPI/TVPI over fund life, management fees, carried interest splits, and LP return distributions. Appropriate because: (a) the entity IS the fund; (b) the LP audience needs to evaluate net returns, not operating P&L.

• Forecast horizon & granularity:
• 10-year fund life (standard VC), with optional 2-year extensions
• Annual granularity for deployment and portfolio markups; quarterly for cash flows
• Investment period: years 1–4; harvesting period: years 5–10

• Key drivers & assumptions:

• Scenarios (Base / Bull / Bear - which variables flex):
• Base: 3.5x gross MOIC, 45% write-off rate, 35% Series A graduation, 2.5x DPI
• Bull: 5x gross MOIC (one or two breakout portfolio companies, e.g., Superhuman / Carrot-scale exits), 30% write-off rate, 2x net MOIC to LPs
• Bear: 2x gross MOIC, 55% write-off rate, no carry generated, management fees only return
• Key flex variables: gross MOIC on top 10% of portfolio, write-off rate, time-to-exit/hold period, Series A graduation rate

• Required sheets / outputs:

1. Inputs & Assumptions - fund params, fee structure, deployment schedule, MOIC assumptions by cohort
2. Deployment Schedule - annual investments by stage (pre-seed vs. seed), check sizes, cumulative capital deployed vs. reserves
3. Portfolio Construction - 75-company model with stage progression (pre-seed → seed → Series A → B → exit), loss/write-off buckets
4. Management Fee Schedule - fee income to GP over fund life
5. J-Curve Cash Flows - LP contributions (calls) and distributions (dividends) by year
6. MOIC / IRR / DPI / TVPI - gross and net, by scenario
7. Waterfall - return of capital → preferred return → catch-up → carry split (LP vs. GP)
8. Sensitivity table - net IRR / net MOIC vs. (gross MOIC of top decile) × (write-off rate)
9. Benchmark Comparison - optional: compare modeled returns to Cambridge Associates pre-seed index