What are returns of VC firms generally? Anyone has done analysis on this?
This was posted earlier today https://news.ycombinator.com/item?id=20984000
Andreessen Horowitz Returns Slip, According to Internal Data
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Re: Andreessen Horowitz Returns Slip, According to Internal Data
#12With this and soft Bank going to great lengths to ensure WeWork IPO's, I think we will see more desperate moves by the investors in coming weeks.
Did you mean "ensure WeWork doesn't IPO"?
I think he means that Softbank can mark their investment at the last valuation if they stay private, but if they go public at $10 they mark a huge loss.
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#13Key points: The funds the firm raised in 2010 and 2011 showed a net internal rate of return of 16% and 12%. The results are a significant drop from the 44% return rate of its 2009 fund.
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Re: Andreessen Horowitz Returns Slip, According to Internal Data
#14Is there a way to pay per article, or do I have to buy the $999 yearly subscription?
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#15See link to a chart on returns by year/fund from the article: https://twitter.com/vcstarterkit/status/1173611439833006080
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#16Is there a way to pay per article, or do I have to buy the $999 yearly subscription?
You can sign up for $1/m for 3 months if you have a referral link. I don’t have one handy, but searching on twitter you can usually find one.
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#17What are returns of VC firms generally? Anyone has done analysis on this?
It is nearly impossible to do so given the private nature of these numbers but having worked in the industry extensively I can tell you the returns are generally atrocious and that no one invests in VCs to be fiscally responsible in the traditional sense.
Investors who put money in VC are generally so wealthy that by the time they are ready to invest in VC they have exhausted all other standard investment opportunities like stocks, private investments in mature companies, personal trusts and real estate and are simply looking for anything with a higher chance of return than a bond.
I’d estimate 90 out of 100 times the VC burns entirely through the money, 9 out of those 100 break even, and 1 out of 100 is profitable. 0.1 generate a return of something like Apple or Google.
That 0.1 in a 100 chance is good enough for the investors as they don’t feel any pain when it’s lost.
That’s why VCs have no interest in sustainable but mid-size businesses, only 100x opportunities. Their public marketing will push that it is because they are visionaries, the reality is that they have no interest or expertise in building mid-size businesses and the returns are so awful for their ‘visionary’ picks that without that 100x investment working out their funds would consistently be total losses.
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#18Key points: The funds the firm raised in 2010 and 2011 showed a net internal rate of return of 16% and 12%. The results are a significant drop from the 44% return rate of its 2009 fund.
Did people think a 44% return was sustainable?
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#19The data is apparently a year old (see chart). A16Z has seen a number of large exits since then (Lyft, GitHub, etc)
Re: Andreessen Horowitz Returns Slip, According to Internal Data
#20I've heard talk about this from VCs for years. Their reputation and results don't match.