How Starport Capital powers portfolio construction with strategic data from Fund Forecasting

Starport Capital, a Palo Alto, California-based venture capital firm founded in 2011, specializes in secondary investments, buying shares from private employees to provide investors with unique access to rising companies. With secondary markets evolving, Chief Executive Officer Donald Yang and Fund Operation Specialist Julia Chen needed more precise ways to identify promising opportunities.

That’s why Starport uses Fund Forecasting. Fund Forecasting lets Yang and Chen discover and model vital data about potential portfolio companies, while tracking Starport’s overall performance in one place. By using Fund Forecasting alongside Carta’s fund administration solutions, Starport Capital can make better decisions to optimize its portfolio construction.

Starport joined Carta in 2020 when the firm moved from special purpose vehicles (SPVs) to more traditional venture capital fund formation. The additional complexity in fund administration required a centralized platform to reduce administrative burden.

With Carta, Yang estimates that he spends up to one-third less time on fund management tasks and has doubled the time he spends on investment-related research and other portfolio analysis. Chen estimates that she spends up to four times less on cash reconciliation tasks, including uploading documents and validating calculations.

With Yang’s energy reallocated towards growth, Starport Capital launched a second fund, doubling its number of limited partners (LPs).

“We doubled the number of LPs largely because we won their trust and respect using Carta. It used to be challenging to share quantitative fund performance details, but Carta provides visibility and transparency on a unified platform,” says Yang.

Yang reports Starport’s limited partners are comfortable using Carta because it feels familiar. The experience is more like buying stocks on a brokerage platform than dealing with the back and forth of emails, spreadsheets, and wires that may be typical with some other funds.

“This wins hearts. It wins trust. It’s tremendous, not even quantifiable,” says Yang. “We really appreciate that we can have our partners on Carta with us this way.”

With taskwork handled in Carta, Yang is able to focus more on being a strategic investor. He uses Fund Forecasting to gain market intelligence. The Fund Forecasting platform enables fund managers like Yang to optimize fund and portfolio performance through built-in dashboards and analytics. Yang and Chen use Fund Forecasting to access real-time data, model investment scenarios, and plan capital allocation and reserve strategies.

“Now that Starport uses Fund Forecasting, I feel like I was investing almost cowboy-style without it. I would see a new opportunity and jump in,” says Yang. “I would do rough calculations in my head based on instinct and experience, because I didn’t have a more efficient way to quantify correlations or differentiators among potential portfolio companies. Fund Forecasting lets us make better judgments going forward.”

The right data to select new portfolio companies

One way Yang relies on Fund Forecasting is to help finalize investment decisions, especially when he needs to choose potential portfolio companies in the same sector.

These decisions can be less straightforward than they were a few years ago. In the past, Yang would avoid overloading investments in one category. Today, rapidly evolving sectors may offer a broader variety of companies with returns Yang doesn’t want to miss.

“In 2016, we invested in Lyft, but we had an opportunity to invest in Uber at the same time. I decided on Lyft because its valuation seemed more reasonable to me,” says Yang. “But in the social media sector, there are many companies that are not as simple to compare to each other—and I have to think about that carefully to benefit our investors.

“For example, Starport invested in Facebook before it was Meta, but we’ve also invested in Nextdoor, a neighborhood community app, and, more recently, in a chat app. And there are other companies that may or may not be similar that could be worth it, but it’s not easy to quantify without the right data.”

That’s when Starport turns to Fund Forecasting. Features like market benchmarks, real-time cap table data, and returns analysis help Yang address the growing complexity of incisive portfolio construction.

“Going forward, whenever we make a new investment, we’ll use Fund Forecasting for pro-forma analysis and stress testing,” says Yang. “The platform is going to help us make decisions based on real-time understanding of companies and sectors.”

Deep quantitative insights build resilience

Fund Forecasting also lets Starport build a more resilient portfolio that can withstand market downturns. As companies take longer to exit or go public, it’s key that Yang can assess various factors and potential impacts.

“I spend a lot of time managing our portfolio, especially on the risk side. It’s not always easy to quantify the risks of a given portfolio composition, but now we have Fund Forecasting as a tool to construct our portfolio the way I really want to. I don’t want to just maximize returns. I need to manage and mitigate potential downsides.

“This is very important to Starport. We want to invest in good times and bad times, but we need to sail rather than stress through the bad times, finding opportunity as we go.”