article thumbnail

What Does the Post Crash VC Market Look Like?

Both Sides of the Table

No blog post about how Tiger is crushing everybody because it’s deploying all its capital in 1-year while “suckers” are investing over 3-years can change this reality. IRRs work really well in a 12-year bull market but VCs have to make money in good markets and bad. It’s just math.

article thumbnail

10 Reflections After 10 Years of NextView

View from Seed

One industry specific example is the strange fascination among some LPs and GPs around term IRR. Even though everyone knows that VC funds take 10+ years to come to fruition, one often can’t help but benchmark themselves based on IRR in the early days.

IRR 205
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

How is the VC Asset Class Doing?

View from Seed

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?

LP 256
article thumbnail

Fundraising Hacks for Venture Capital and Private Equity Funds

David Teten

Chris Douvos is one of the very few LPs who blogs, at SuperLP.com. As an idea of how high the bar is for a GP, he says , “I dove into our fund log from the last couple of quarters and found that the mean IRR (among VCs listing one) was over 36%.” If you have any other resources to add, please contact me. . ” .

article thumbnail

Flexible VC, a New Model for Companies Targeting Profitability

David Teten

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. (co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. Of the Inc. 5000 companies, only 6.5%

article thumbnail

How Covid-19 Has Impacted VC Portfolios

View from Seed

This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. VC’s may have been expecting significant liquidity from some companies in 2020 and early 2021, but will need to put that off for some time even if the companies are doing ok. Reshuffling the deck.

Portfolio 215
article thumbnail

Why Entrepreneurs Seem to Be Growing Fangs

Seeing Both Sides

A little IRR math shows the price of this elongated time to liquidity – a 5x return in 5 years yields a 38% IRR. To achieve that same 38% IRR in 9 years, a 20x return is required! If the founders take money off the table, they are incented to go for the bigger win and don’t mind taking the time to get there.

IRR 36