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How do venture capital firms make money by investing in startups?

Gust

The venture capital fund itself makes money… …by investing early in a startup company’s life, when success is not at all assured. In exchange for investing capital to help the company grow, the fund receives an ownership interest in the company. original post can be found on Quora @ [link] *.

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The Rise & Fall of Great Venture Firms [Part 1] ? AGILEVC

Agile VC

I happen to be fascinated by the history of the VC industry, and one of the things we discussed at a recent offsite are the common threads behind the rise and fall of great venture capital firms. What’s a “fair” split of fee income and carried interest when a partner joins several years/funds after others?

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High Returns On A Small Fund Challenge Low Returns On A Big Fund

David Teten

I recently had an extensive debate with Tom about why and whether small funds (like mine, ff Venture Capital ) tend to outperform large funds (like his). We thought that you’d be interested in our conversation. Counting IPOs gets us only a short distance to an Answer. Susan Woodward , formerly Chief Economist of the U.S.

LP 114
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How VCs Make Money….Hopefully

ithacaVC

Fourth, GP1 is entitled to a carried interest in fund profits. In its simplest form, think of profits as amounts returned to the fund in excess of capital commitments. Therefore, the returns from the sale/IPO of the fund’s portfolio companies must clear capital commitments before GP1 gets any carried interest.

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Barney Frank says: Don't Mess with VCs or Angels

Seeing Both Sides

On Financial Reform, Barney Frank was very direct when I pressed him on the myriad restrictions that are being discussed in the Senate bill around angel investing and the discussions about taxing carried interest. Here's what he said: "We will exempt venture capital from the carried interest tax.". "We

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ProfessorVC: How much is enough?

Professor VC

While my ownership stake in the company has been diluted through these financings (and the merger with uControl), my carried interest (paper value of my equity) has been going up with each increase in valuation. Labels: angel investing , entrepreneurial finance , entrepreneurial lessons , venture capital. Venture News.

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The VC Shakeout: Are We There Yet?

Agile VC

There are some obvious structural reasons why a shakeout in the venture capital industry takes a long time. This was also the period when VC started expanding seriously in emerging markets like India and China, and many LPs put new capital into these OUS funds. 2) Rebirth of Some Firms - Mobius Venture Capital is now defunct.

LP 154