Antonio Miguel
MSM fund
Published in
6 min readApr 4, 2023


Building insights on a boring topic: does founder reporting predict venture performance?

MSM is an early-stage venture capital impact fund that invests in companies addressing social and environmental challenges. We invested in 37 impact ventures over the past 3,5 years. Our team regularly holds growth discussions with the aim of supporting MSM portfolio companies. During these meetings, we came up with the hypothesis that the companies that deliver quality and diligent reporting are also those that perform the best.

In the well-ordered idea of how we think the world makes sense, the notion that diligence equates performance, holds appeal and offers a sense of control to both investors and founders. So often, the world is the opposite of linear and the most obvious assumptions are in fact quite paradoxical.

To test this hypothesis, we setup an empirical study to test if diligence — in the form of founder reporting — equates to performance. In short, based on our portfolio, we found out that diligent, timely and high-quality reporting is a trait of high-performing venture teams.

Why do we care about reporting?

As all venture funds, our remuneration is tied to the performance of our portfolio. In our case, there is an added layer: impact. As an impact fund, we link our carry directly to the overall performance of our portfolio companies, which encompasses their financial and impact performance. If our ventures do not achieve their social and environmental goals, our remuneration is affected accordingly. We have written about it here in case you want to read it in more detail.

In a context of fast-paced decision-making with imperfect and insufficient information, having access to data is a lever for better decisions. Reporting is one of the many sources of data that allow us, as partners to our portfolio companies, to transform information (a raw material) into knowledge (an outcome). Knowledge is where insights that can be predictors of performance derive from.

This is not the first time we used data to verify preconceptions about the natural order of the venture world. A few moons ago, we thought that events could be a source of high-quality pipeline for new investments — demo days, pitches, talks. We built a dataset that backwards-mapped our pipeline to find that from a funnel perspective (i.e., from being logged in our platform, into becoming ‘interesting’, us ‘doing work’, moving to ‘deep analysis’, eventually to an ‘IC discussion’, to be on the 0,5% companies in which we invest), we had zero portfolio companies that we met at events.

Conversely, MSM portfolio founders and co-investors share with us only a handful of ventures from the universe of those logged on our platform, but they are far more prominent on those at the later stage of our decision-making funnel and in our current portfolio. As a result, we doubled down on our existing founder and co-investor networks.

We live, and we learn (we hope). In our case, we have built a growth platform that serves as the solid ground upon which we test our assumptions to continuously learn. You can read about how we built this in-house platform here and here.

Setting up a study on reporting and venture performance*

To find whether there is a link between reporting and performance, we adopted a causal-comparative approach in the analysis of a dataset specifically built for the purpose of this research. The dataset was used to perform an exploratory data analysis that aimed at identifying potential causes of relationships between the different features available.

The dataset included the following features:

  • frequency of reporting submitted by founders since the first investment by MSM took place (via email or Rundit, the reporting tool we use)
  • quality of reporting, as perceived by the MSM lead
  • quality of communication, measured by a score given by each MSM lead
  • impact performance, measured by the latest impact multiple available for each company in Q2 2022
  • financial performance, measured by the latest post-money valuation of the company

We did not discover any earth-shattering truths, but there are some grains of truth that are instructive:

1. Data suggests that a higher quality of reporting corresponds to higher financial performance across the analysis of all our portfolio companies.

2. Segmenting reporting completion into four buckets — poor, below average, above average, good — has demonstrated that the means for both impact and financial performance are remarkably consistent across segments, i.e., impact and financial performance go together. That is, when impact reporting is good, so is financial reporting.

3. When it comes to impact performance, there is no clear correspondence between performance and quality of reporting. One of our hypotheses is that impact performance takes longer to pick up given the early-stage nature of our portfolio, contrary to funding rounds which take place nevertheless and define new valuations (which influences #2 above).

4. Data suggests that a higher communication score given by the MSM lead corresponds to a higher financial and impact performance. Note that the communication score encompasses more than just the monthly reporting and includes ad-hoc and informal communication via e-mail, WhatsApp, video calls, meals together and even sports activities in some cases.

5. We also assessed the relationship between reporting quality and communication. It was often found that ventures tend to have a higher score on one of the two. This can hint the hypothesis that more frequent communication results in less reporting, as most topics are discussed informally with the MSM lead.

How we are transforming learnings into actionable behaviors within our team

Our analysis had several limitations and results should be taken with a grain of salt. Nevertheless, it gave us actionable guidance into changes that are under our control as an investment team and that we can adopt in a structured manner.

It became clear that reporting is just one of the pieces of the puzzle when it comes to founder-investor relationship. Trust-building is a line, not a dot, and entails regular and consistent support in both formal and informal mediums. However, good communication flows between an investor and founders should not come at the expense of formal reporting, which is an essential tool to capture the full value of MSM as a partner and investor.

Regardless of the strength in the relationship between reporting and performance, we now have more data and anecdotal evidence to demonstrate to existing and future portfolio companies that disciplined and timely high-quality reporting is a trait of high-performing teams. It will be their decision to adopt, or not, behaviors of such teams.

We concluded that impact performance needs a better proxy than reporting, as we could not find an isolated relationship between the two. We are obsessed with understanding what can contribute to superior impact performance and help our companies punch above their weight when it comes to their role in tackling the most prominent social and environmental challenges that we face as a society.

This conclusion is pushing us to continue chasing better questions that can lead to finding predictors of impact performance.

Our plans for the next research study

We are currently building a new layer on top of our datasets. This new layer is based on the ticketing system we built to structure our portfolio management as it generates relevant data, such as the various types of requests we receive from portfolio companies. Labelling and crunching this data can potentially be a hint towards performance predictors. We will find out and share it with you soon.

If you would like to learn more in detail about this research study, please reach out. If you would like to share your experience with reporting, as a founder or as an investor, let’s talk

*this study was done as part of a research thesis at NOVA School of Business and Economics and authored by Alice Segre. Thank you, Alice, for all your work — you are amazing!