View from Seed

AUGUST 17, 2021

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

IRR Dilution Founder Portfolio 205

View from Seed

AUGUST 17, 2021

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 156

IRR Dilution Founder Portfolio 156

View from Seed

AUGUST 17, 2021

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 136

IRR Dilution Founder Portfolio 136

David Teten

JANUARY 19, 2021

Flexible VC creates early liquidity which can be either reinvested or distributed to LPs. That said, nothing is cost-free. More complex cost of capital calculation. Inversely, if the company has slower than predicted growth, the effective cost of capital is automatically lowered. Transaction costs. Cost of capital.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

View from Seed

JULY 15, 2020

Mid-stage portfolios can be more acutely impacted if many companies have fat cost structures and were investing heavily in growth that is not materializing. This may not hurt the ultimate exit value of these companies, but the passage of time will hurt the fund’s ultimate IRR. Unevenly distributed, but broadly optimistic.

Portfolio 215

Portfolio IRR Dilution Distribution 215

Steve Blank

MARCH 31, 2014

Unfortunately as we’ve learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won’t save a company when their industry encounters creative disruption. For example they can reduce component cost, introduce a line extension or create new versions of the existing product.

Private Equity 325

Private Equity Metrics China Intellectual Property 325

Tim Keane

JANUARY 12, 2010

If you look at the spreadsheet, you will see that the “Required Rate of Return” is expressed as an IRR.   Internal Rates of Return naturally compound, so a 50% IRR is 7.59   (If you plug in an IRR of 58.5%   Internal Rates of Return naturally compound, so a 50% IRR is 7.59 times at 5 years and 11.39

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68