Both Sides of the Table
SEPTEMBER 15, 2022
IRRs work really well in a 12-year bull market but VCs have to make money in good markets and bad. was originally published in Both Sides of the Table on Medium, where people are continuing the conversation by highlighting and responding to this story. It’s just math. And we’re patient. What Does the Post Crash VC Market Look Like?
Up and Running
MARCH 6, 2019
But don’t quote me a damned IRR. Or the web subscription forecast that tracks web visits, conversions, conversion rate, pay-per-click results, email opens, and so forth. They are assumptions cascading on assumptions, presented as if they were statistical truth. Not discounted cash flow.
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David Teten
JANUARY 19, 2021
Yes, via conversion rights at a valuation cap. Yes, via conversion rights at a valuation cap. As a result, unfounded hockey-stick graphs and unicorn promises give way to financial fluency, realistic expectations, frank conversations about what a business can credibly achieve, and transparency. . Flexible VC: Compensation-based.
Tim Keane
JANUARY 12, 2010
If you look at the spreadsheet, you will see that the “Required Rate of Return” is expressed as an IRR. Internal Rates of Return naturally compound, so a 50% IRR is 7.59 (If you plug in an IRR of 58.5% Internal Rates of Return naturally compound, so a 50% IRR is 7.59 times at 5 years and 11.39
Both Sides of the Table
MAY 24, 2021
as measured by MOIC, TVPI and IRR and by sources that don’t reveal the underlying data and who themselves have to rely on incomplete datasets. The method some LPs use to compare funds is called PME (public market equivalent ) but honestly my experience has been that benchmarking is really challenging for LPs (and VCs alike).
View from Seed
JULY 15, 2020
One topic of conversation among VC’s over the last few months is how their portfolios are faring during the Covid pandemic. This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. Reshuffling the deck.
Both Sides of the Table
MAY 19, 2018
Or if you’re a VC raising from LPs you have to list all of your deals, your investment value, your carrying value, your multiples, your IRRs, TVPIs, DPIs, etc along with net cashflows plus your previous LPAs. These collective sets of documents form the basis of what somebody looking at investing would call “financial due diligence.”
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