Both Sides of the Table

SEPTEMBER 15, 2022

At our mid-year offsite our partnership at Upfront Ventures was discussing what the future of venture capital and the startup ecosystem looked like. IRRs work really well in a 12-year bull market but VCs have to make money in good markets and bad. It’s just math. And it WILL be deployed, that’s what investors do. So it’s about 20%.

Technical Review 416

Technical Review Pre-Money Valuation San Francisco Valuation 416

View from Seed

DECEMBER 4, 2019

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.

LP 256

LP IRR Distribution Portfolio 256

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. 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%   (If you plug in an IRR of 58.5%

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC creates early liquidity which can be either reinvested or distributed to LPs. 20-30% is a common target IRR for investors. Low; a surprising number of Series A/B startups are missing basic financial reporting mechanisms.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

View from Seed

JULY 15, 2020

This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. Unevenly distributed, but broadly optimistic. As you can tell from my first two points, the effects of Covid have been quite unevenly distributed within a VC portfolio. Reshuffling the deck.

Portfolio 215

Portfolio IRR Dilution Distribution 215

Feld Thoughts

APRIL 21, 2016

As Bill points out, many funds are sitting on huge paper gains which translate into large TVPI, MOC, gross IRR, or whatever the current trendy way to measure things are. If you are a founder, an employee in a startup, or an investor in a startup, you have to be playing a long term game. Long term is not a year.

Marketing 70

Marketing Down Round Startup IRR 70

Steve Blank

MARCH 31, 2014

Just look at the disruptive challenges that businesses face today– globalization, China as a manufacturer, China as a consumer, the Internet, and a steady stream of new startups. Perhaps that’s because where established companies might see risks or threats, startups see opportunity. Building Innovation Internally is Hard.

Private Equity 330

Private Equity Metrics China Intellectual Property 330