The synthetic LP update
From fund data, KPIs and board notes to a draft quarterly LP letter where every number traces back to an approved table. Shown on a made-up fund.
Reviewed by the editor
- For
- VC · PE · Private credit · Hedge funds
- Run time
4 to 8 hrs→ 15 min- Tested on
- Example Fund II (made-up data)
- Spend
- Existing AI seats
01Build an approved facts table, not a letter1 min 25 s · Codex CLI, read-only, no web
Feed the fund summary, portfolio KPIs and board notes and ask for one row per fact, with the value copied exactly, its file and row, and the math for anything derived. Ask for a "Gaps" list. The finance lead signs off this table, so the letter can only say what's in it.
PromptYou are a fund operations analyst. Below are the Q3 2026 inputs for a VC fund: an approved fund summary (F1), portfolio company KPIs (F2) and board deck and partner notes (F3). All of it is example data. Task: build an APPROVED FACTS TABLE, not a letter yet. 1. One row per fact an LP update needs: fund performance, capital activity, each portfolio company's KPIs and key events, exits, reserves, and anything marked confidential. 2. Columns: ID (T1, T2...), Fact, Value exactly as written in the input, Source (F1/F2/F3 plus row, column or slide), Period, Type (reported / derived / note / confidential). 3. For derived figures (growth rates, multiples, sums) show the math and the input IDs. Do not round unless you say so. 4. Copy numbers exactly. If something an LP would expect is missing (for example audited figures or a fair value method), list it under "Gaps". Never fill a gap from memory. Output Markdown only. INPUTS: [paste F1, F2 and F3]
It produced 68 rows with the math for every ratio, and flagged real gaps: no fair value method, no audit status for the notes, and no escrow release terms.
02Draft the letter from the table only26 s · A fresh session, no files or web
A new session writes the letter from the approved table alone, with a [T#] tag on every number. Tell it to report bad news as plainly as good news and to leave out anything marked confidential.
PromptUsing ONLY the approved facts table below, draft a quarterly LP update for Example Fund II, Q3 2026. Rules: - About 400 words. Sections: Headline numbers (a small table), Quarter in brief, Portfolio (one short paragraph per company, active companies first), Capital and reserves, What we are watching, Notes on the figures. - Every factual sentence or table cell ends with the fact ID it comes from, like [T4]. Numbers must match the table exactly. - Leave out anything marked confidential. Do not name pipeline companies. - Report bad news as plainly as good news. No adjectives the facts don't support, no forecasts beyond what the notes say, no promises about future returns. - In Notes on the figures, say which numbers are unaudited or management-reported and what is excluded (for example escrow). FACTS TABLE: [paste the table from step 1]
Every number matched. But it dropped Quarry Health's 8-month runway, called a $0.1 dip "declining", lost the $ signs, and gave Lumen Ledger's good news no space.
03Controller check1 min 9 s · A second model, read-only
A second reviewer checks each claim against the table and the original files, and flags tone problems and leaks as well as wrong numbers. Use a different model from the drafter if you can.
PromptYou are a fund controller reviewing a draft LP letter before it goes to investors. Below are the draft (with [T#] citations), the approved facts table and the original inputs. For EVERY factual claim in the draft, output a row in a Markdown table: | # | Claim (short) | Cited | Value in table | Value in original input | Verdict | Verdicts: MATCH, ROUNDED-OK, DERIVED-OK (show the math), MISMATCH, UNSUPPORTED, TONE (wording stronger or softer than the facts), LEAK (confidential or pipeline detail). Be strict. Then list each fix with exact corrected wording. DRAFT: [paste the draft from step 2] FACTS TABLE: [paste the table from step 1] INPUTS: [paste F1, F2 and F3]
It rated 66 claims and found no wrong numbers. It caught the dropped fictional-data label and a too-broad "unaudited" line, and it was overcautious about disclosure, wanting the bridge-round and Series C lines removed.
04Tie out every number to the source files yourselfNon-negotiableabout 10 min · Your fund admin file and a calculator
Check each figure against the source file, not the AI's table. Redo every ratio. Then read the letter as an LP: is anything material missing? This is the step you can't skip, because the AI steps only checked each other.
All 17 claims tied out. We added the runway and Lumen's retention, fixed three wording and unit problems, and made a judgment call to keep the bridge-round line.
05Sign-off and sendabout 2 min · You, then the CFO and compliance
Keep the facts table and checking notes with the letter in your files. The CFO signs the numbers and compliance signs the wording. Only then does it go out through your normal LP portal.
Sample output
The letter after checking, unedited apart from the fixes listed below. Everything in it is example data about a made-up fund. Each chip links to the input file it came from.
Example Fund II, L.P.: Q3 2026 update
EXAMPLE DATA. A made-up fund and made-up companies. As of September 30, 2026. $ in millions.
Headline numbers
| Metric | Q2 2026 | Q3 2026 |
|---|---|---|
| Called capital, cumulative | $84.0 F1 | $91.5 of $150.0 committed F1 |
| Distributions, cumulative | $6.0 F1 | $14.0 F1 |
| NAV | $112.0 F1 | $118.6 F1 |
| Net TVPI / net DPI | 1.40x / 0.07x F1 | 1.45x / 0.15x F1 |
| Net IRR since inception | 14.1% F1 | 15.0% F1 |
Quarter in brief
We called $7.5. We distributed $8.0, all of it from the sale of Northwind Pay F1F3. NAV rose to $118.6 from $112.0 and net TVPI to 1.45x from 1.40x F1. We made no new investments F3.
Portfolio
Lumen Ledger grew ARR 15% in the quarter, to $20.7 from $18.0, with 78% gross margin and $31.0 of cash F2. Its board deck reports 124% net revenue retention and its first two enterprise bank customers F3. Our fair value is $30.0 on $12.0 of cost F2.
Quarry Health grew ARR about 4%, to $9.9 from $9.5, after a large payer contract slipped to Q1 2027 F2F3. With $7.2 of cash and $0.9 of monthly burn, runway is about 8 months; the board approved a plan to cut burn to $0.6 a month from November 2026 F2F3.
Tidewater Robotics' ARR was flat at $4.0 against $4.1, and two pilot customers paused orders F2F3. We marked our position down 20%, to $6.0 from $7.5 F2F3. The company is raising a bridge, and we expect to lead it with up to $2.0 from reserves, subject to our investment committee's approval F3.
Northwind Pay was sold to a strategic acquirer in July. We received $8.0 at close on $5.0 of cost, about 1.6x F2F3.
Capital and reserves
We have called 61% of commitments, leaving $58.5 uncalled, and hold $22.0 in reserves F1.
What we are watching
- Quarry Health's runway and whether the burn plan takes hold from November F3.
- Tidewater Robotics' bridge round and the two paused pilots F3.
- Lumen Ledger plans a Series C in H1 2027; there is no term sheet F3.
Notes on the figures
The fund figures are CFO-approved and unaudited; portfolio KPIs are reported by management and unaudited F1F2.
Up to $1.0 of Northwind escrow may be released in 2027. It isn't in DPI or in this letter's distributions F3.
The example inputs
# EXAMPLE DATA. Example Fund II, L.P. (fictional). Fund summary as of Sep 30, 2026, approved by the CFO. $ in millions. metric,q2_2026,q3_2026 committed_capital,150.0,150.0 called_capital_cumulative,84.0,91.5 distributions_cumulative,6.0,14.0 nav,112.0,118.6 net_tvpi,1.40,1.45 net_dpi,0.07,0.15 net_irr_since_inception,14.1%,15.0% capital_called_in_quarter,,7.5 distributions_in_quarter,,8.0 reserves_remaining,,22.0
# EXAMPLE DATA. Fictional portfolio companies, management-reported, unaudited. Q3 2026 vs Q2 2026. $ in millions. company,status,arr_q2,arr_q3,gross_margin_q3,cash_q3,monthly_burn_q3,headcount_q3,fund_cost,fund_fair_value_q3 Lumen Ledger,active,18.0,20.7,78%,31.0,1.1,142,12.0,30.0 Quarry Health,active,9.5,9.9,64%,7.2,0.9,88,10.0,11.0 Tidewater Robotics,active,4.1,4.0,41%,3.8,0.8,61,8.0,6.0 Northwind Pay,exited Q3,,,,,,,5.0,
EXAMPLE DATA. Fictional board deck excerpts and partner notes for Example Fund II, Q3 2026. [Lumen Ledger board deck, Aug 2026, slide 4] ARR grew to $20.7M at quarter end. Net revenue retention 124%. Signed first two enterprise banks. Plans a Series C in H1 2027; no term sheet. [Quarry Health board deck, Sep 2026, slide 6] Growth slowed to 4% QoQ after a large payer contract slipped to Q1 2027. Cash runway about 8 months at current burn. Board approved a cost plan cutting monthly burn to $0.6M from Nov 2026. [Tidewater Robotics partner note, Sep 2026] Two pilot customers paused orders. Company is raising a bridge; Example Fund II expects to lead with up to $2.0M from reserves, subject to IC approval. Fair value marked down to $6.0M from $7.5M last quarter. [Northwind Pay exit memo, Jul 2026] Sold to a strategic acquirer. Fund received $8.0M at close on a $5.0M cost. A further escrow of up to $1.0M may be released in 2027; not included in DPI. [Partner note] New investment: none in Q3. Pipeline: two Series A term sheets under discussion, not signed. Do not name pipeline companies in the LP letter.
Checking table
Every claim in the letter, tied out against the input files, not against the AI’s facts table. Of 17 claims: 11 verified, 4 corrected or rephrased, and 2 added because the draft left out something an LP needs.
| Claim | Where we checked | Result | Note |
|---|---|---|---|
| Fund table: called, distributed, NAV, TVPI, DPI, IRR for Q2 and Q3 | F1, every cell | Verified | Each cell checked against the CFO file. |
| TVPI 1.45x and DPI 0.15x | F1 | Derived | Arithmetic check: (118.6 + 14.0) ÷ 91.5 = 1.449; 14.0 ÷ 91.5 = 0.153. Both agree with the approved figures. |
| Called $7.5, distributed $8.0 from Northwind | F1; F3 exit memo | Verified | The $8.0 in-quarter distribution equals the $8.0 Northwind receipt. |
| No new investments; pipeline not named | F3 partner note | Verified | The note says not to name pipeline companies. Neither AI step did. |
| Lumen ARR +15% to $20.7 from $18.0 | F2 | Derived | 20.7 ÷ 18.0 = 1.15. |
| Lumen 124% NRR and first two enterprise banks | F3, Lumen deck slide 4 | Added | The AI draft left out the good news from the board deck. We added it so the letter isn't only metrics. |
| Quarry ARR about 4% to $9.9; payer contract slipped | F2; F3, Quarry deck slide 6 | Verified | 9.9 ÷ 9.5 = 1.042. |
| Quarry runway about 8 months | F3, Quarry deck slide 6 | Added | The AI draft gave cash and burn but dropped the runway line. That's the most important fact about the company this quarter, so we restored it. |
| Quarry burn cut to $0.6 a month from November | F3 | Verified | |
| Tidewater ARR $4.0 vs $4.1; two pilots paused | F2; F3 | Corrected | The draft said ARR was "declining". A $0.1 move is better described as flat; we kept both numbers so LPs can judge. |
| Tidewater markdown 20% to $6.0 from $7.5 | F2; F3 | Derived | 6.0 ÷ 7.5 = 0.80. The prior mark is only in the partner note, not in F2. |
| Tidewater bridge, up to $2.0 from reserves, subject to IC | F3 | Kept as a direct quote | The second model wanted this removed as not cleared for disclosure. We kept it because it uses reserves LPs fund, and kept the "subject to approval" wording. This is a judgment call for your own compliance policy. |
| Northwind $8.0 on $5.0 cost, about 1.6x | F2; F3 | Derived | 8.0 ÷ 5.0 = 1.6. This is gross proceeds over cost, not a net LP return. |
| 61% called, $58.5 uncalled, $22.0 reserves | F1 | Derived | 91.5 ÷ 150.0 = 61.0%; 150.0 − 91.5 = 58.5. |
| Lumen Series C plan, no term sheet | F3 | Verified | |
| Audit status and escrow exclusion | F1 header; F2 header; F3 | Corrected | The draft said "portfolio figures" were unaudited, which also covered the board notes. We split the fund and KPI files, as the second model suggested. |
| Units | F1 and F2 headers | Corrected | The draft dropped the $ sign and the "in millions" note from the body. We put both back. |
Left out on purpose: the names of pipeline companies (the partner note says not to name them) and Lumen Ledger’s headcount and burn detail, which LPs didn’t need this quarter.
Common failure modes, and how to catch them
Bad news buried
Models summarize evenly, so the line that matters most (runway, a markdown) gets dropped or softened.
Check: Before checking numbers, list the three facts an LP most needs and confirm each is in the letter.
In our run: Quarry Health's 8-month runway was dropped. We restored it.
Tone drift
Small moves become "declining" or "strong"; a plan becomes a promise.
Check: Strike every adjective the numbers don't support. Keep both figures so LPs can judge.
In our run: a $4.1 to $4.0 move was called "declining". We kept both numbers.
Gross and net mixed up
Exit proceeds over cost get read as LP returns, or gross figures sit next to net TVPI.
Check: Label every multiple as gross or net and say what it excludes.
In our run: the draft labeled Northwind's 1.6x correctly. We kept it.
Units and labels dropped
"$ in millions" sits in a file header and never reaches the letter.
Check: Put the unit in the table heading and the opening line.
In our run: the draft dropped the $ signs. We added them back.
Confidential detail leaks
Pipeline names, term sheets or unapproved financing plans slip in from partner notes.
Check: Mark confidential rows in the facts table, then search the letter for each one.
In our run: no pipeline names leaked. The second model was stricter than we were on what to disclose.
Audit scope overstated
One "unaudited" line ends up covering numbers it doesn't apply to, or a CFO-approved number reads as audited.
Check: Say which file each kind of figure came from and its audit status.
In our run: we split the fund and KPI lines, as the second model suggested.
Who it’s for
- VC: the quarterly letter for a fund with a handful to a few dozen companies, where most of the time goes into pulling KPIs from board decks.
- PE: the portfolio section of a quarterly report, with value-creation notes tied to each company’s board pack.
- Private credit and hedge funds: the same pattern works for a monthly or quarterly investor letter: swap portfolio KPIs for positions, exposures or loan-level data, and keep the approved table.
The workflow replaces the first draft, not your CFO or compliance review. Use only tools your firm has approved for confidential LP and portfolio data. We used made-up data so we could publish every input.
Collect KPIs from each company, rebuild the fund table, write, then tie out every number by hand.
About 3 minutes of AI time and about 12 minutes of tying out and editing, on a four-company example. A real fund with more companies takes longer, and most of the time should still go to the check.
The tools
We ran every AI step with the Codex CLI on an existing subscription, each in a fresh session, with no web access, no API keys and no paid data. Using one model for both the draft and the check is weaker than using two; if you have both, draft with Claude and check with Codex, as in Playbook 01. Portfolio monitoring and investor reporting tools in our directory that collect the inputs for this workflow: Visible, Standard Metrics, Chronograph, Vestberry, Rundit, Juniper Square.
Make it yours
- Have your CFO or fund administrator sign off the facts table before drafting. Then the letter can only say what finance already approved.
- Keep last quarter’s letter and table. Next quarter, ask for a draft that flags every number that changed.
- Mark confidential rows (pipeline, term sheets, personnel) in the table, and search the draft for each one before it goes out.
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Illustrative workflow, not investment advice. Example Fund II and every company, person and number on this page are made up. Nothing here describes a real fund or a real company.
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