Both Sides of the Table
SEPTEMBER 15, 2022
What You Can Learn From Public Markets It doesn’t really take a genius to realize that what happens in the public markets will filter back to the private markets because the ultimate exit of these companies is either an IPO or an acquisition (often by a public company whose valuation is fixed daily by the market). It’s just math.
View from Seed
DECEMBER 4, 2019
The longer the portfolio maintains the same value without distributing back cash, the worse the fund’s ultimate IRR. This equates to something in the neighborhood of a 10% IRR, which isn’t great given the illiquidity of the asset class and strength of the public markets. So, is this good or bad?
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David Teten
JANUARY 19, 2021
The value ascribed by subsequent investors (in a secondary); buyers (acquisition); or the public markets (IPO). This causes the cost of capital for Flexible VC, often calculated through IRR (similar to an interest rate), can be higher than that of venture debt or traditional RBI. 20-30% is a common target IRR for investors.
Hunter Walker
JULY 18, 2021
All in all it worked out fine, driven primary by some fortunate acquisitions to companies like Microsoft, Pinterest and Facebook, the latter two in pre-IPO equity which grew substantially prior to their public listings. I never really tracked IRR or net returns, but I did pay close attention to ‘lessons learned.’
Steve Blank
JUNE 23, 2016
As a consequence, corporations used metrics like return on net assets (RONA), return on capital deployed, and internal rate of return (IRR) to measure efficiency. Capital is returned to these investors through liquidity events (originally public offerings, but today mostly acquisitions).
Steve Blank
MARCH 4, 2014
A consequence of using these corporate finance metrics like RONA and IRR is that it ‘s a lot easier to get these numbers to look great by 1) outsourcing everything, 2) getting assets off the balance sheet and 3) only investing in things that pay off fast. Corporate KPI’s, Policy and Procedures: Innovation Killers.
Hunter Walker
NOVEMBER 13, 2018
You’re basically along for the ride with an investor who has very different incentives than you do – a different time frame, the AUM business vs IRR business, and requiring a scale in outcome that’s just astronomical. Through internal efforts, through acquisition, through investment.
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