Crescendus™ | Inefficiencies in Private Equity & Venture Capital Portfolios (& Tips to Change it) This presentation will be relevant for the following audience- 1. Venture Capital Firms 2. Corporate Venture Capital Divisions 3. Private Equity Firms 4. Limited Partners

1. © Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
Inefficiencies in Private Equity & Venture Capital Portfolios
(& Tips to Change it!)

2. Crescendus™
VC & PE CASH BURNRATE INEFFICIENCIES
© Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
2
Investmentsin core functions repeated
across each & every portfolio investment
leading to high cash burnrate/company
Sub-optimal cross-portfolio efficiencies
obtained (limited/no sharing of pooled
resources)

3. Crescendus™
VCs & PEs- Focus on Shared Services Efficiencies
© Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
3
Supply Chain
Similarto
GPOs (Scale
Efficiencies)
Best Practices
Business
Development
Alliances
Partnering
Product
Development
Solution
Continuum
across
Industry
Application
Customer
Workflow
Human
Resources
Hiring
Talent
Development
Marketing
Intelligence &
Insights
Pricing
Strategies
Most of these functions can be
executed by shared central
resources
There is no need to hire
individual VP's or
Directors/portfolio company
Easy Logistics: Most
investments are within 100
miles of each other
Practical Rationale- 70-80% of
portfolio companies FAIL in
spite of hiring " A "teams . So,
shared services allow you to
limit costs & preserve cash.

4. Crescendus™
Portfolio Mindset Change: Learn from Large Companies!
© Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
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Finance
• There is no need
for individual
CFOs/portfolio
company
Legal
• Havecommon
GeneralCounsel
for allof your
portfolio
companies
Compliance,
Regulatory& Taxes
• Shared
resources
sufficient,incl.
for international
expansion
IT
• Use shared scale
for extracting
vendor
discounts
1. Majority of your portfolio investments (e.g. 5-10 companies/sector) can all be pooled under
one unit, which is basically what a business unit is in a large company!
2. A business unit at large company also has a common finance controller, who handles all the
different product lines.
3. The key functions such as finance, human resources, legal, compliance, taxes and IT are all
shared & their scale extracts efficiencies.

5. Crescendus™
Can this be done? Remember- Practical Reality
© Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
4
PRACTICAL
REALITY
70-80% of Portfolio FAILS
(in spite of hiring "A" Executive
Teams & Board Members)
The above fact hasn't changed over
the past 15 yrs
Shared
Resources
within VC/PE
company
Shared
Resources
across VC/PE
companies
Scale
Efficiencies
& Cash
Preservation
Yes & DO the following

6. Crescendus™
What about the CEOs? How should they run their firms?
© Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
6
CEO
Company 1
Shared
Resources
(funded by VC or PE
across portfolio
companies)
CEO
Company 2
CEO
Company 3
SHARED RESOURCES to INDIVIDUAL RESOURCES
Revenue & Cashflow- If it crosses $40-50 million in
revenue and the portfolio company is generating
positive cashflow,then explore the option of moving
some of the shared resources functions within the
individual company.
Even in such situations, items such as supply chain,
legal, human resources, compliance and taxes should
be delegated to shared resources. Remember- Cash is
King!
CEOs (or Founders)- Unless the individual founders
are directly involved, we recommend hiring seasoned
CEOs that can manage several porfolio companies
simultaneously, similar to a business unit with
multiple product portfolios in a large company.

7. Crescendus™
Contact Information
© Crescendus™ 2012-2014. All Rights Reserved.
Preparing your Business for Whatever is Ahead™
11
Contact@crescendus.com
www.crescendus.com
Knoxville, TN, USA