stack ranking

Definition

The internal process VCs use to rank portfolio companies or investment opportunities from best to worst. A forced ranking system that ensures someone always gets picked last for dodgeball.

Example Usage

In our quarterly LP meeting, we stack rank the portfolio—this quarter, you went from #8 to #23, which isn't great for your Series B.

Origin

Performance management technique popularized by Jack Welch at GE, adopted by tech and VC

Fun Fact

Stack ranking is controversial because it forces relative comparisons—in a portfolio of winners, someone still has to be ranked last and feel terrible about it.

Source: Performance management and portfolio operations

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