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Why Average VC Returns Don’t Really Matter

Agile VC

The VC industry (both the GP part and the LP part) pays attention to the sector’s returns, but the broader tech ecosystem only occasionally tunes in. 2) No Synthetic Alternative – If an LP can’t “buy” VC as an index, could they replicate the returns of an index some other way?

LP 176
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It’s Morning in Venture Capital

Both Sides of the Table

In 1998 there were around 850 VC funds and by 2000 there were 2,300. Thomson Reuters data shows that around $10 billion of LP money went into VCs per year pre bubble. By 2000 the total LP commitments had mushroomed to more than $100 billion. So of course returns from 2000-2010 were subpar on average for the industry.

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As Populist as it May Feel, 98% of VCs Aren’t Dumb

Both Sides of the Table

But as an LP you can’t count on that any more than VCs can. The goal of an LP is to get into the top decile. When it went to raise its fund 10 years ago the rumor was that many LPs were disappointed with recent returns and did not re-up. In 2000 our industry had more than $100 billion in LP money.

LP 374
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Why The SBIC Doesn’t Work For Venture Capital Anymore

Feld Thoughts

Each of the SBIC funds were raised in the 2000 – 2002 time period. On paper, only one is in positive return territory as a fund, but the SBIC leverage is a substantial negative factor for the LP investors in that particular fund. The US government, however, lost most of the $2 billion it put into SBIC firms.”

SBIC 142
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The case for European venture

The Equity Kicker

I was chatting with a friend last night about the lack of institutional investor (LP) interest in European venture capital as an asset class. I think that if you believed everything in the table above and you backed yourself to be able pick a good fund manager you would be pretty keen on investing in European venture.

Europe 143
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Applied Venture and the inexorable rise of value-add VC

The Equity Kicker

From around 2000, and perhaps coinciding with the need to work harder to win deals as opportunities dried up after the internet bubble burst, individual partners at VC firms began adding ‘helping CEOs win’ to their job descriptions. . The GP-LP structure used by most funds is a brake on innovation here too. And what’s holding it back?

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The Rise & Fall of Great Venture Firms [Part 2]

Agile VC

Back in the 2000-2001 timeframe, a flood of LP capital was coming into the VC asset class given the strong returns of the mid-late 90s tech boom/bubble. In the midst of the internet & telecom meltdown at the beginning of the 2000s, as a firm CRV realized there were insufficient opportunities to profitably invest $1.2B.

Cofounder 193