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Portfolio Diligence

A tier-1 early-stage investor paused a portfolio company’s follow-on round and enacted a board-led refactor to the company’s GTM strategy thereby saving the company – after discovering undetected and significant deterioration in unit economics using Termina.

Challenge

In mid 2024, a tier-1 early-stage investor was faced with an urgent need to augment their portfolio monitoring to enter into preemptive follow-on decisions with conviction.

The investor had not previously deployed quality of growth audits on their portfolio and was keen to understand if there were any opportunities or risks across it’s portfolio. Of particular importance was the detection of any hidden risks that could jeopardize fund drivers from fully realizing.

Solution

In mid 2024, the investor engaged Termina and was able to immediately deploy Termina Scans on portfolio companies as they approached material events. This included impending follow-on decisions and board meetings.

Within the first cohort of companies and associated scans, a principal on the portfolio management team discovered significant issues in a key portfolio company seeking follow-on funding through a Termina Scan.

While top-line revenue growth looked sound both in the scan and in standard reporting, deeper parts of the scan revealed that the company had deteriorated significantly across many of Termina’s Global Benchmarks including revenue growth.

Further, the company had accelerated its go to market (GTM) strategy a year earlier after their initial funding round, causing an underestimated and serious deterioration in CAC, payback periods, and ACV. This was further exacerbated by the company’s unusual revenue retention, which dropped precipitously at 5 months.

Outcome

Termina was able to assist the investor in detecting fixable risks within a key portfolio position — risks that would have remained hidden and may have jeopardized the probability of a successful outcome had they remained hidden.

The principal was able to detect the deterioration using Termina, inform the board partner, board and executive team, and take decisive action potentially changing the trajectory of the company.

Impact

Start to End

18 hrs

Deal Size

$25M USD

Time Saved

n/a*

Data Processed

15Krows

‹ Value Creation

Due Diligence ›

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