Comments on: Explained: VC target returns http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/ Nic Brisbourne's view from London on venture capital and exploiting change in technology and media Sat, 11 Feb 2012 20:08:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: chris h. http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-870 chris h. Mon, 14 May 2007 09:31:42 +0000 http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-870 Hi Thanks for the explanation. I have a follow-up query. How does this relate to the providers of the debt that funds the majority of VC deals? I had assumed that the debt would have a similar chance of going pop(i.e. there can't be many companies that are financially robust enough to service their debt but generate no return for the VC) but surely the debt has a limited upside? Or am I simply confusing the sort of LBO deals that get broadsheet headlines with the more speculative technology investments. Chris Hi
Thanks for the explanation.

I have a follow-up query. How does this relate to the providers of the debt that funds the majority of VC deals?

I had assumed that the debt would have a similar chance of going pop(i.e. there can’t be many companies that are financially robust enough to service their debt but generate no return for the VC) but surely the debt has a limited upside?

Or am I simply confusing the sort of LBO deals that get broadsheet headlines with the more speculative technology investments.

Chris

]]> By: chris h. http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-10735 chris h. Mon, 14 May 2007 09:31:00 +0000 http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-10735 Hi Thanks for the explanation. I have a follow-up query. How does this relate to the providers of the debt that funds the majority of VC deals? I had assumed that the debt would have a similar chance of going pop(i.e. there can't be many companies that are financially robust enough to service their debt but generate no return for the VC) but surely the debt has a limited upside? Or am I simply confusing the sort of LBO deals that get broadsheet headlines with the more speculative technology investments. Chris Hi
Thanks for the explanation.

I have a follow-up query. How does this relate to the providers of the debt that funds the majority of VC deals?

I had assumed that the debt would have a similar chance of going pop(i.e. there can’t be many companies that are financially robust enough to service their debt but generate no return for the VC) but surely the debt has a limited upside?

Or am I simply confusing the sort of LBO deals that get broadsheet headlines with the more speculative technology investments.

Chris

]]> By: nic http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-867 nic Sat, 12 May 2007 15:51:19 +0000 http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-867 HI Azeem - interesting data. I guess all I'm saying is that we target returns that would put us in the top 16% of US funds. Euro venture returns haven't been good up to this point (in fact last year rolling one year returns were better than in the US for the first time) so benchmarking against them wouldn't set the bar high enough. HI Azeem – interesting data. I guess all I’m saying is that we target returns that would put us in the top 16% of US funds. Euro venture returns haven’t been good up to this point (in fact last year rolling one year returns were better than in the US for the first time) so benchmarking against them wouldn’t set the bar high enough.

]]> By: nic http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-10734 nic Sat, 12 May 2007 15:51:00 +0000 http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-10734 HI Azeem - interesting data. I guess all I'm saying is that we target returns that would put us in the top 16% of US funds. Euro venture returns haven't been good up to this point (in fact last year rolling one year returns were better than in the US for the first time) so benchmarking against them wouldn't set the bar high enough. HI Azeem – interesting data. I guess all I’m saying is that we target returns that would put us in the top 16% of US funds. Euro venture returns haven’t been good up to this point (in fact last year rolling one year returns were better than in the US for the first time) so benchmarking against them wouldn’t set the bar high enough.

]]> By: azeem http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-866 azeem Fri, 11 May 2007 19:37:03 +0000 http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-866 Hey Nic I'm surprised about the 25-30% IRR. I surveyed lifetime returns for 1004 US VC funds in early-stage or balanced funds; and 664 European VC funds. Only 5.6% of European funds returned 25% or more over their lifetime; in the US that number was 16% or so, fewer than 1 in 6. Only 39% of venture funds did better than the S&P 500 performance during 1996-2005 (IRR 9.1%). According to Thomson, balance Euro VCs returned an cap weighted average of 7.3% and an upper quartile fund (if you could get in one) returned 7.4%. Early stage funds did even worse. There are of course exceptions--the top performing Euro fund did 262%. Very very nice indeed, if you can get in. (Messrs Rimer, I'm sure ;) ) Want to chat with you. Ping me a mail. aa Hey Nic

I’m surprised about the 25-30% IRR. I surveyed lifetime returns for 1004 US VC funds in early-stage or balanced funds; and 664 European VC funds.

Only 5.6% of European funds returned 25% or more over their lifetime; in the US that number was 16% or so, fewer than 1 in 6. Only 39% of venture funds did better than the S&P 500 performance during 1996-2005 (IRR 9.1%).

According to Thomson, balance Euro VCs returned an cap weighted average of 7.3% and an upper quartile fund (if you could get in one) returned 7.4%. Early stage funds did even worse.

There are of course exceptions–the top performing Euro fund did 262%. Very very nice indeed, if you can get in. (Messrs Rimer, I’m sure ;) )

Want to chat with you. Ping me a mail.
aa

]]> By: azeem http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-10733 azeem Fri, 11 May 2007 19:37:00 +0000 http://www.theequitykicker.com/2007/05/11/explained-vc-target-returns/#comment-10733 Hey Nic I'm surprised about the 25-30% IRR. I surveyed lifetime returns for 1004 US VC funds in early-stage or balanced funds; and 664 European VC funds. Only 5.6% of European funds returned 25% or more over their lifetime; in the US that number was 16% or so, fewer than 1 in 6. Only 39% of venture funds did better than the S&P 500 performance during 1996-2005 (IRR 9.1%). According to Thomson, balance Euro VCs returned an cap weighted average of 7.3% and an upper quartile fund (if you could get in one) returned 7.4%. Early stage funds did even worse. There are of course exceptions--the top performing Euro fund did 262%. Very very nice indeed, if you can get in. (Messrs Rimer, I'm sure ;) ) Want to chat with you. Ping me a mail. aa Hey Nic

I’m surprised about the 25-30% IRR. I surveyed lifetime returns for 1004 US VC funds in early-stage or balanced funds; and 664 European VC funds.

Only 5.6% of European funds returned 25% or more over their lifetime; in the US that number was 16% or so, fewer than 1 in 6. Only 39% of venture funds did better than the S&P 500 performance during 1996-2005 (IRR 9.1%).

According to Thomson, balance Euro VCs returned an cap weighted average of 7.3% and an upper quartile fund (if you could get in one) returned 7.4%. Early stage funds did even worse.

There are of course exceptions–the top performing Euro fund did 262%. Very very nice indeed, if you can get in. (Messrs Rimer, I’m sure ;) )

Want to chat with you. Ping me a mail.
aa

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