Steve Blank

MARCH 4, 2014

20 th century Management Tools for Execution In the 20 th century business schools and consulting firms developed an amazing management stack to assist companies to execute. These tools brought clarity to corporate strategy, product line extension strategies, and made product management a repeatable process. StageGate Process.

IRR 335

IRR Startup Business Model Agile 335

David Teten

SEPTEMBER 16, 2014

Many pursue an “active” retirement where they can not only keep up-to-date with current trends in their areas of interest, but also make use of their experience and networks to provide operational expertise, general management advice, and critical introductions. Average Angel Returns Over Time. Time Period. Total Investments. 1994 – present.

Angel Investor 114

Angel Investor Technical Review Venture Capital Pre-Money Valuation 114

David Teten

MAY 16, 2017

A few years ago, I presented at an Invesco conference on Emerging GPs, and one of the highlights was a presentation by Laurie Weir summarizing CALPERS’ selection criteria under their Private Equity Emerging Manager Program Review. Denis Tse: Fund Management Craftsmanship: An LP’s Food for Thought for Emerging VC General Partners.

Private Equity 60

Private Equity Venture Capital Equity Technical Review 60

Tim Keane

JANUARY 12, 2010

Good investors use the valuation discussions to gauge the business savvy of the management team and to understand their ability to appreciate and deal with economic market forces that set values.   For individual angels and others investing their own money, this may be more fluid than for someone with responsibility for a managed fund.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Seeing Both Sides

SEPTEMBER 26, 2010

One LP complained to me the other day: “The founders get liquidity, the angels get liquidity, and the pressure to go IPO is taken off the shoulders of the board and management team. To achieve that same 38% IRR in 9 years, a 20x return is required!

IRR 36

IRR IPO Entrepreneur LP 36

Version One Ventures

SEPTEMBER 22, 2021

3x the invested capital net of fees over a period of about ten years for a net IRR in the low twenties). Our returns are obviously very good, but in no way unique in today’s venture markets, especially among emerging managers that invest at the seed stage. So, is 10x the new 3x ?

Venture Capital 201

Venture Capital IRR Private Equity Seed Stage 201

Gust

AUGUST 16, 2012

On the other hand, the large majority of self-described “angel investors”, both domestically in the US and internationally, would not fall into this category.

Angel Investor 152

Angel Investor IRR Early Stage Portfolio 152

Both Sides of the Table

MAY 25, 2013

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? There have been a lot of management shuffles at Twitter. The best VCs know the buyers and can help guide and manage the process. It is changing.

LP 374

LP Later Stage IRR Term Sheet 374

VC Adventure

OCTOBER 5, 2020

IRR will depend on the timing of cash flows but as a quick rule of thumb, venture funds look to return at least 3 times the invested capital – after fees, so more like 3.5x Taking the most aggressive end of these numbers would still only have this one company returning 70% of the fund’s capital. on a gross basis.

IRR 174

IRR Venture Capital Community Partner 174

David Teten

MAY 8, 2012

As Steve Case has said, it’s ridiculous that anyone can gamble and be guaranteed to lose money, but there are strict regulations around who can invest in early-stage private companies and earn (in some cases) a 27% IRR on their capital. *. The Entrepreneurs Access to Capital Act helps to redress this. Start now! *

Securities and Exchange Commission 148

Securities and Exchange Commission IRR Entrepreneur Angel Investor 148

View from Seed

JULY 15, 2020

VC’s also manage multiple funds that get deployed over 10+ years, with new investments happening over the first 2-3 years of a fund’s life. This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. Vintage year differences. Reshuffling the deck.

Portfolio 215

Portfolio IRR Dilution Distribution 215

Steve Blank

AUGUST 5, 2014

I loved what he was working on (thanks to perspective in data management from my large company experience here—that prepared mind thing). Don’t be afraid to take a step down (Oracle was a $1 Million business, I had been marketing manager for a $100 Million business). I was on the way to my lifetime IRR of 90%.

Venture Capital 335

Venture Capital Silicon Valley Chicago Cofounder 335

Hunter Walker

JULY 18, 2021

I never really tracked IRR or net returns, but I did pay close attention to ‘lessons learned.’ As an angel investor you can certainly be helpful, and perhaps even de-risk a specific question or problem the founders face, but you aren’t on the org chart, aren’t spending enough reps to be the product manager of a product-led company.

Cap Table 154

Cap Table IRR Angel Investor IPO 154

David Teten

OCTOBER 15, 2013

ff Venture Capital has consistently generated a gross IRR on invested capital in excess of 30%, in a world where the average ten-year returns for venture capital firms are in the single digits. Angel investing Contributed Articles ff Venture Capital Fund Management Venture Capital' Now we can.

Venture Capital 114

Venture Capital Accredited Investor IRR Later Stage 114

Professor VC

MARCH 10, 2009

His latest venture, Bharosa, was sold to Oracle for a 6X multiple in 3 years to his angel investors, a sweet close to triple digit IRR. I take CFO roles in early stage companies and participate on the management team during the early financings and business model development phases.

Bootstrapping 28

Bootstrapping San Jose Silicon Valley Angel Investor 28

Up and Running

JUNE 17, 2013

We looked at the product, the market, and the management team, with some attention to defensibility and scalability, and we made our own intuitive comparisons of possible ROI. And Internal Rate of Return (IRR)? Finance angel investment IRR ROI venture capital' I trust my judgment on that. It’s a complete waste of time.

IRR 71

IRR Flash Angel Investor Venture Capital 71

This is going to be BIG.

MAY 16, 2016

Sounds like a huge amount, but only later does he say that only " 476 funds which had known Net IRR values, the overwhelming majority of which were from vintage 2002, or more recently." That means if you have 476 funds, you're looking at about 119 managers. 3) You can't eat IRRs for breakfast. Really really big.

Venture Capital 73

Venture Capital IRR LP .Net 73

Feld Thoughts

JULY 31, 2013

I was one of the day one execs of LVLT, as well as an early member of the management team of MFS Communications. By the time we sold to Level 3, our total proceeds to equity owners and management were $225M. Our equity IRR has averaged around 50% since inception. I had recently left Level 3 Communications. We paid them $8.7M

Bandwidth 148

Bandwidth Colorado Startup IRR 148

Agile VC

NOVEMBER 13, 2012

For those who aren’t familiar, Mobius was a VC fund with offices in Silicon Valley and Boulder CO and at it’s peak Mobius had $2B+ under management. a VC fund’s entire portfolio in aggregate, net of management fees and carried interest) a good return from an LP’s perspective would be 2.5-3.0x

LP 154

LP Portfolio Venture Capital IRR 154

Growthink Blog

JUNE 3, 2014

Over the last three weeks, we have discussed the various factors that drive the 25% IRR return potential of the startup and emerging company investing class. Yet, for the very most part, it is to this world that most of us turn to manage our money. So when results come back that are barely average, we should not be surprised.

Omaha 91

Omaha Accredited Investor IRR Silicon Valley 91

VC Cafe

JULY 2, 2012

Lots of returns are being made these days, but the latest CalPers report shows dissapointing returns by Israeli VC firms , with an IRR of 3.5%-3.8% AOD makes software used by healthcare managers who provide long-term care for senior citizens and others. to JVP and Carmel, the highest performing funds. . Facebook Inc.

Israel 109

Israel Latvia Lithuania Russia 109

Professor VC

JANUARY 17, 2008

If my math is correct, this is approximately a 31% IRR, which has to beat individual angel investments on aggregate and venture capital returns over the period of the study (1990-2007). I take CFO roles in early stage companies and participate on the management team during the early financings and business model development phases.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Hunter Walker

FEBRUARY 25, 2018

One consistent LP complaint I hear about new’ish fund managers is that they forget a bunch of fund construction and portfolio modeling decisions are connected. Our J Curve and early IRR may look worse than other funds. “What did you change about Homebrew III to better fit ‘seed phases’ versus seed rounds ?” That’s a great question!

Product 92

Product IRR LP Seed Stage 92

The Equity Kicker

MAY 27, 2015

Fund managers are assessed, in part, on their ratio of expenses to assets under management. This applies to all classes of fund managers, including pension fund managers, IFAs, private equity fund managers, and venture capital fund managers. Therefore, the lower the expense levels the better.

Cost 60

Cost IRR Private Equity Salary 60

K9 Ventures

MAY 14, 2011

As fiduciaries, the general partners of the uVC funds have to begin to focus on the dreaded VC I-word : IRR. The institutional funds typically manage a relatively large pot of capital (~$300M or higher per fund, with multiple funds running). This also changes the types of deal terms that micro-VCs will undertake.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Accredited Investor 125

David Teten

MARCH 2, 2013

The Kauffman Foundation points out several reasons why they choose to keep pouring capital into the industry: the J-curve narrative, VC investment allocation mandates (which should disproportionally benefit large funds), the “relationship business” philosophy, and potentially misleading return metrics (such as IRR).

LP 114

LP Securities and Exchange Commission Silicon Valley Venture Capital 114

Growthink Blog

MAY 21, 2014

One reader reference Gust Founder David Rose’s new book - “ Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups ” and to Rose’s main contention that to access the 25% IRR potential of the asset class one must hold positions in not less than 20 companies. He asked, “ Is this practical advice? Labor Arbitrage.

San Diego 72

San Diego Warrant IRR Investment Bankers 72

Growthink Blog

MARCH 29, 2010

If you own or manage an existing business, go for it. Startup investing has outperformed every major investing class, with IRRs of over 27.3% (click here to learn more). A business owner / manager looking to grow your existing business? Click here to learn more. Grow A Business. Launch that new product. Offer that new service.

IRR 59

IRR Entrepreneur Washington Government 59

Venture Chronicles

JUNE 30, 2010

Over the past 10 years their quarterly internal rate of return (IRR)—the primary measure of VC success—was dismal, hovering in the single percentage points and sometimes dipping into negative territory. Tags: Uncategorized VC IRR. This piece in HBR is must read, it details why there will be a lot fewer VC funds in the future.

IRR 36

IRR IPO Venture Capital Portfolio 36

Berkonomics

JANUARY 6, 2022

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. One tool often used: the “cutout” for management. That further reduces the amount available to founders if not still in the ranks of management.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

David Teten

JULY 10, 2017

Why couldn’t a large company offer 1:1 or greater matching of the angel investing of their senior management? Angel investing is an exceptionally high-return asset class; I have collected twelve studies on angel returns in the US and UK, which show median internal rate of return (IRR) between 18 and 38 percent.

Employee 60

Employee Balance Sheet Syndication Syndicate 60

K9 Ventures

NOVEMBER 30, 2008

In return for the operational role the GPs play, their firm receives a Management Fee. Industry averages for the management fee are expected to be around 2.5% Well, for one, you have to try and secondly, the management fee makes for a nice perk. annually that equates to a management fee of $12.5M of the size of the fund.

IRR 48

IRR Venture Capital LP Early Stage 48

abovethecrowd.com

APRIL 20, 2016

These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. We have already seen examples of founders and management obtaining liquidity in front of investors. Do you feel the need to raise more capital quickly before the prices erode further and bring down your IRR?

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Berkonomics

OCTOBER 1, 2015

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. That further reduces the amount available to founders if not still in the ranks of management. So this advice is directed to the investors.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

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. We have already seen examples of founders and management obtaining liquidity in front of investors. This specific bias is rampant in the VC world right now.

Marketing 70

Marketing Down Round Startup IRR 70

David Teten

AUGUST 21, 2019

The RBI investor is motivated to help the company grow because that speeds up the pace of revenue payback, and therefore IRR. Requires regular monthly payments and careful cash management. That said, Jim Toth, Managing Partner, Riverside Acceleration Capital, observes, “Actually, everyone is aligned towards growth.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Ben's Blog

AUGUST 17, 2020

If an investor could have identified Salesforce’s ability to maintain such prolonged growth upfront, invested in its 2004 IPO, and then held on through to today, they could have made ~70x returns: equivalent to ~30% IRRs over a 16 year period. Not too shabby! But would that be a good deal for the shareholders entering at this stage?

Valuation 36

Valuation Balance Sheet Cofounder Forecast 36