HarbourVest focuses on identifying and evaluating primary partnership investment opportunities across all stages—venture, buyout, mezzanine debt, distressed debt—and all regions.  Long-standing relationships and our open-door policy for meeting with fund managers generate hundreds of primary fund investment opportunities each year.  Ultimately, through our rigorous due diligence process and highly selective approach, we have historically invested in 1% of the funds raised.

Investment Selection Process
In evaluating new partnership opportunities, HarbourVest’s due diligence efforts focus on the manager, the investment focus and strategy, and the terms of the partnership.

To evaluate a manager, HarbourVest thoroughly reviews the performance of prior investments, the experience of the individual professionals, the generation of deal flow, the quality of due diligence, and the structure of the organization.  We identify the investment, operational, and other financial expertise of each team member as well as their experience sourcing, developing, and exiting portfolio investments.  This experience and track record are evaluated in the context of the manager's organizational structure, including ownership, investment decision-making process, and incentives for generating superior investment performance.

The focus and strategy of a partnership are evaluated in terms of overall attractiveness and specific relevance to the manager's experience and past success.  We assess the extent to which the manager's skills and prior experience align with the strategy of the new offering.  Our team also evaluates the likelihood that the strategy being employed will achieve the desired results, which include a superior internal rate of return to investors.

Finally, HarbourVest evaluates how the structure and terms of the partnership align the interests of the manager with those of the investors.  We explore such issues as the sharing of profits with the manager, the vesting of carried interests, key man provisions, distribution policy, the allocation of profits, losses, and operating expenses between the fund manager and the limited partners, and the treatment of transaction fees.