This site uses cookies to improve your experience. To help us insure we adhere to various privacy regulations, please select your country/region of residence. If you do not select a country, we will assume you are from the United States. Select your Cookie Settings or view our Privacy Policy and Terms of Use.
Cookie Settings
Cookies and similar technologies are used on this website for proper function of the website, for tracking performance analytics and for marketing purposes. We and some of our third-party providers may use cookie data for various purposes. Please review the cookie settings below and choose your preference.
Used for the proper function of the website
Used for monitoring website traffic and interactions
Cookie Settings
Cookies and similar technologies are used on this website for proper function of the website, for tracking performance analytics and for marketing purposes. We and some of our third-party providers may use cookie data for various purposes. Please review the cookie settings below and choose your preference.
Strictly Necessary: Used for the proper function of the website
Performance/Analytics: Used for monitoring website traffic and interactions
The market was down considerably with public valuations down 53–79% across the four sectors we were reviewing (it is since down even further). ==> Aside, we also have a NEW LA-based partner I’m thrilled to announce: Nick Kim. IRRs work really well in a 12-year bull market but VCs have to make money in good markets and bad.
The top quartile has distributed 2.03x (vs. 1.68) and the median fund now has distributed 1.27X (vs. The longer the portfolio maintains the same value without distributing back cash, the worse the fund’s ultimate IRR. Based on that metric, the top quartile fund has now distributed 2.03X after 12 years.
It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. My partners will tell you that I am an incredibly impatient person. You want someone who will challenge you and be an intellectual sparring partner.
Unfortunately as we’ve learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won’t save a company when their industry encounters creative disruption. For example, Coke added snack foods, which could be distributed through its existing distribution channels.
It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. My partners will tell you that I am an incredibly impatient person. You want someone who will challenge you and be an intellectual sparring partner.
It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. My partners will tell you that I am an incredibly impatient person. You want someone who will challenge you and be an intellectual sparring partner.
(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. Similar to the explosion of seed funds in the past decade, we (and some limited partners too ) believe these Flexible VCs are on the forefront of what will become a major segment of the venture ecosystem. Of the Inc. 5000 companies, only 6.5% return cap.
As you can see from the chart their data suggests there are about $25 billion of VC distributions per year in the US. The better way to think about VC returns is, do the firms consistently beat alternative asset clases on an IRR basis to adjust for the increased risk and lack of liquidity? The top 2% do not drive 98% of the returns.
It’s a generalization but one that’s pretty well accepted in venture circles and it’s how many VCs describe target fund distribution, myself included. Correlation Ventures just released a study that shows the distribution of outcomes across over 21,000 financings and spanning the years 20014-2013. But does this heuristic match reality?
It’s a generalization but one that’s pretty well accepted in venture circles and it’s how many VCs describe target fund distribution, myself included. Correlation Ventures just released a study that shows the distribution of outcomes across over 21,000 financings and spanning the years 20014-2013. But does this heuristic match reality?
Distributions can actually be drawn out over an extended period of time, but for the purposes of this exercise, I just kept the fund to 11 years. Do seed investors have Limited Partners with different return expectations than Series A and beyond investors? Time is the enemy of IRR. It's what you'd expect. No surprises there.
For too long, venture’s been over-funded and over-staffed with homogeneity: the same kinds of partners, operating with the same fund model, looking at the same investments, in the same markets. Partnerships getting hit the hardest: those without some recent distributions (some are rumored to have nothing in the past 7-9 years!)
All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. Do you feel the need to raise more capital quickly before the prices erode further and bring down your IRR? LIMITED PARTNERS (LPS).
We figured that given their commitment to the asset class, so long as we did our job well and treated them like partners in our business, they would show up each fund to back us. No reason to sell winners prematurely just because of original fund length, especially given our LPs are largely cash-on-cash return focused more than IRR.
We organize all of the trending information in your field so you don't have to. Join 5,000+ users and stay up to date on the latest articles your peers are reading.
You know about us, now we want to get to know you!
Let's personalize your content
Let's get even more personalized
We recognize your account from another site in our network, please click 'Send Email' below to continue with verifying your account and setting a password.
Let's personalize your content