The relationship between General Partners and Limited Partners is built on trust, communication, and aligned incentives — but it’s tested most when portfolio performance is uncertain. How GPs communicate with their LPs during both good times and bad is often the deciding factor in whether LPs re-commit to the next fund.
The Communication Calendar
Quarterly reports are the backbone. Best-in-class quarterly reports include: portfolio company updates (revenue, key metrics, milestones), fund-level performance metrics (IRR, TVPI, DPI, updated NAV), new investments and follow-on decisions, capital call and distribution summaries, and qualitative commentary on the market environment. The report should be delivered within 45 days of quarter-end — LPs view late reporting as a governance red flag. Length: 15-25 pages. Format: PDF with consistent structure quarter to quarter so LPs can quickly find what they need.
Annual meetings (in-person or hybrid) provide an opportunity for deeper discussion: detailed portfolio company presentations, strategy updates, market outlook, and Q&A with the GP team. The best annual meetings include portfolio company CEO appearances and breakout sessions by sector or theme. For Indian funds, combining the annual meeting with a visit to portfolio companies in Bengaluru or Mumbai provides LPs with tangible exposure to the ecosystem.
Capital call notices (formal requests for LPs to transfer committed capital) require minimum 10 business days notice under most LPAs. Best practice: provide 15-20 days and include the investment memo for the deal the capital is being used for. LPs appreciate context — a capital call with no explanation of the investment feels opaque.
Transparent Reporting on Bad News
The most important GP communication skill is delivering bad news. Portfolio company failures, markdowns, and write-offs are inevitable in venture capital — LPs expect them. What they don’t accept is being surprised. If a major portfolio company is in trouble, the best GPs communicate proactively: “Company X is facing challenges in [specific area]. Here’s our assessment, here’s what we’re doing about it, and here’s the likely impact on fund returns.” LPs who first learn about a problem in the quarterly report — months after it began — lose trust in the GP’s judgment and transparency.
Valuation Methodology and Consistency
One of the most sensitive aspects of GP-LP communication is how portfolio companies are valued. LPs have become increasingly sophisticated about valuation — they look for: consistent methodology (using the same framework quarter to quarter, not cherry-picking methods that produce the highest valuations), marks at or below the most recent funding round valuation (not above), timely markdowns when company performance deteriorates, and third-party valuation for late-stage, concentrated positions. The ILPA (Institutional Limited Partners Association) guidelines recommend that GPs provide sufficient detail for LPs to independently assess the reasonableness of valuations.
The Advisory Committee
Most venture funds establish a Limited Partner Advisory Committee (LPAC) comprising 3-7 of the largest LPs. The LPAC reviews and approves conflict-of-interest transactions, co-investment allocations, fund extension requests, and valuation methodology changes. For GPs, a well-functioning LPAC is a governance asset — it provides structured LP input on sensitive decisions and creates a group of LP advocates who feel ownership over the fund’s direction. Selecting LPAC members who are experienced, engaged, and constructive (rather than passive or adversarial) is a critical GP decision.
For more on fund management best practices, explore our LP & GP Insights archives. For VC fundamentals, browse our VC 101 series.
Further Reading
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What This Means for Capital Allocation
The implications of relationship reporting communication trust extend beyond individual deal dynamics. At the portfolio level, fund managers are rethinking concentration versus diversification, adjusting follow-on reserves, and recalibrating exit timelines. The most successful allocators are those who combine rigorous quantitative analysis with deep sector expertise and founder relationship networks. As the Indian venture ecosystem matures, these structural shifts will increasingly determine which funds deliver top-quartile returns and which fall behind. Smart capital — not just more capital — will define the next chapter of Indian venture investing.