The Three Questions Your Portfolio Model Should Answer (Before IC Meeting)

You're in an IC meeting. Manager presents a new fund. Great track record, good fit.

Someone asks: "What happens if we commit $5M?"

You need an answer. Not in 3 days—now.

After managing multiple private fund commitments, I learned that every portfolio model needs to answer three core questions. If yours can't, you're flying blind.

Question 1: "Where Will We Land?"

Why You Need This

You're making commitments today that will play out over 10-15 years.

You need to know: If we keep doing what we're doing, where will our portfolio be in 3 years? 5 years? 10 years?

What Most Models Show

Current NAV.

Maybe with a chart showing historical growth.

The Problem

Current NAV is backward-looking. It tells you where you were 6-9 months ago (when marks were struck).

It doesn't tell you where you're going.

What You Actually Need

Forward-looking NAV trajectory:

• Start with latest marks per fund
• Project forward using fund-level assumptions
• Show expected path for next 3-10 years
• Include confidence bands (P10/P50/P90) when you need them

How to Think About It

Your funds are at different stages:

• Early-stage fund (Year 2): Still deploying, NAV growing as capital is called and invested
• Mid-stage fund (Year 5): Fully deployed, NAV growing from portfolio company appreciation
• Late-stage fund (Year 9): Starting exits, NAV declining as distributions happen

Each fund has its own trajectory. Roll them up to portfolio level, and you see where you'll land.

When It's Useful

• Planning new commitments ("Can we afford this?")
• Board reporting ("Here's where we're heading")
• Liquidity planning ("Will we need to sell secondaries?")

Question 2: "When Can We Commit Again?"

Why You Need This

You have a great opportunity. Manager you trust. Good terms.

But: Do you have the liquidity to commit?

What Most Models Show

Current cash balance.

Maybe a simple "we have $X in dry powder" calculation.

The Problem

Your cash position will change dramatically over the next 2 years:

• Capital calls coming (you're contractually obligated)
• Distributions arriving (but timing is uncertain)
• Operating expenses
• Other commitments you already made

Current cash tells you nothing about future capacity.

What You Actually Need

2-year quarterly liquidity forecast:

• Beginning cash each quarter
• Expected capital calls (by fund)
• Expected distributions (by fund)
• Net cash position each quarter
• "Capacity to commit" calculation

How to Think About It

Build a simple waterfall per quarter:

Q1 2025:
  Beginning Cash: $50M
  - Capital Calls: $8M
  + Distributions: $12M
  - Operating: $1M
  = Ending Cash: $53M

Q2 2025:
  Beginning Cash: $53M
  - Capital Calls: $7M
  + Distributions: $9M
  - Operating: $1M
  = Ending Cash: $54M

...repeat for 8 quarters

Now you can see: "We'll have $50-55M in cash over next 2 years, so we can safely commit$10-15M to new managers."

When It's Useful

• Evaluating new opportunities ("Can we afford this commitment?")
• Saying no with confidence ("We don't have liquidity for this right now")
• Planning fundraising ("We'll need to add capital in Q3 2026")

Question 3: "What Happens If We Do This Deal?"

Why You Need This

IC asks: "What's the impact if we commit $5M to this manager?"

You need to show:

• How allocation changes
• How liquidity is affected
• Whether it creates concentration risk

And you need to show it now, not Friday.

What Most Models Require

3 days to rebuild your model:

• Add new fund sheet
• Update master rollup
• Fix broken formulas
• Re-run scenarios
• Build new charts

By then, opportunity is gone.

What You Actually Need

Instant scenario modeling:

• Add hypothetical commitment
• See immediate impact on:
  • Allocation (by strategy, geography, vintage)
  • Liquidity (capital calls over next 2 years)
  • Concentration (are we overweight this vintage/strategy?)
  • NAV trajectory (how does this change our 5-year projection?)

How to Think About It

Your portfolio model should be dynamic enough to add a "draft" commitment and see portfolio-level changes immediately.

Example:

• Current PE allocation: 32%
• Add $5M buyout commitment
• New PE allocation: 34%
• Impact on 2025-2027 capital calls: +$3.5M (70% deployment over 3 years)
• Impact on 2028-2032 distributions: +$8-12M (assuming 2.0-2.4x TVPI)

Now IC has real data to make the decision.

When It's Useful

• Every time someone pitches you a deal
• Comparing multiple opportunities ("Fund A vs Fund B impact?")
• Stress-testing concentration ("What if we add 3 more growth funds?")

Why This Matters

Private markets are strategic decisions, not tactical ones.

You're building a portfolio that will compound over decades.

If your model can't answer these three questions, you're making decisions without the information you need.

What Changes When You Can Answer These Questions

You stop reacting, start planning

Instead of evaluating each deal in isolation, you see how it fits your portfolio trajectory.

You stop guessing about liquidity

You know when you have capacity. You can commit with confidence or say no without FOMO.

You make faster, better decisions

IC meeting happens. Question gets asked. You have the answer. Decision gets made while you're still in the room.

Implementation: How to Build This

Level 1: Basic (Excel)

• Track actuals religiously
• Build simple cashflow forecast (capital calls + distributions)
• Create 3 scenarios (base, upside, downside)
• Manually update when evaluating new deals

Time investment: 1-2 days to build, 2-4 hours/quarter to maintain Good for: 5-10 funds

Level 2: Advanced (Excel + Scripts)

• Automate data extraction from PDFs
• Build Monte Carlo simulation (1000 runs)
• Create dynamic scenario modeling
• Version control with Git

Time investment: 1-2 weeks to build, 1-2 hours/quarter to maintain Good for: 10-20 funds

Level 3: Software (Purpose-Built Tool)

• Automatic data extraction
• Real-time scenario modeling
• Built-in Monte Carlo
• Multi-currency support
• Instant answers to all three questions

Time investment: 1-2 hours to set up, 15 min/quarter to review Good for: 15+ funds, or if your time is worth more than building Excel models

The Practical Test

Open your current portfolio model.

Try to answer these three questions right now, without spending more than 5 minutes:

1. What will our NAV be in December 2028?
2. How much liquidity will we have in Q3 2026?
3. What happens if we commit $5M to a new growth equity fund today?

If you can't answer them quickly, your model isn't working for you.

That's not a criticism—it's reality for most people managing private funds in spreadsheets.

But it's fixable.

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Want to see how these questions get answered in Nagare? Schedule a quick demo and we'll walk through your actual portfolio.