VC Adventure
MAY 5, 2022
I’m observing that IRR is a metric that is becoming an increasing focus in venture, replacing fund return multiple as the key metric of success. I understand the draw of IRR, and – as a fund draws to a close – there’s no question it’s an important metric. Recycling hurts IRR. This is a mistake.
Hippoland
NOVEMBER 13, 2016
But as we’ve seen, these valuations can be hocus-pocus — even at later stage rounds, we’ve seen lots of companies of late fall from grace and become massively devalued overnight when they cannot raise their next round at a higher valuation. So there are a lot of unrealized gains built into the IRR of an early fund.
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K9 Ventures
DECEMBER 14, 2008
Lets assume that Shylock Ventures is capable of producing a 20% IRR on a $100M fund. If Shylock Ventures were now to raise a $500M fund or a $1B fund, it probably will not be able to maintain its IRR. The historical returns were created by investing certain amounts of capital in companies at a certain stage.
Both Sides of the Table
MAY 25, 2013
But the larger funds usually have lower returns because they are often investing bigger dollars at later stages with less risk and therefore lower returns. As you can see in this Cambridge Associates data, early-stage investing beat later stage investing in returns in 70% of the past 30 years. Yeah, true.
Both Sides of the Table
MAY 24, 2021
But markets have changed and I think investors, founders and experienced executives who want to join later-stage startups can all benefit from playing the long game. as measured by MOIC, TVPI and IRR and by sources that don’t reveal the underlying data and who themselves have to rely on incomplete datasets.
Startup Professionals Musings
MARCH 12, 2023
Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return).
Startup Professionals Musings
JUNE 13, 2020
Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return).
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