What percent of VCs hit the magic "3x net" performance mark?
Data below is for nearly 2,000 US venture funds, all of whom manage between $1M and $100M in LP capital. All direct venture funds, no fund of funds or crypto included.
And the 3x net? That's the green slice of each vintage year.
(Well, actually that's just the funds that are currently sitting at or above 3x net TVPI. LPs don't want TVPI, they want DPI, so these percentages are perhaps slightly generous!)
𝗪𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗶𝘀 𝗺𝗲𝗮𝗻?
1. Everyone says 3x net, few actually get there. And why did 3x become the standard? Actually asking, maybe there's some interesting history.
2. Manager selection is paramount, of course. Being average in VC is a money-losing proposition. But the persistence of returns to the top quartile of managers is, in my view, on slightly shakier ground than many suppose.
3. Emerging VCs need to pitch something IN ADDITION to potential returns. Everyone has 3x, top-quartile manager on the deck. What is so special about you? How differentiated is your access to top founders? Why will you beat these rather steep odds?
4. Pretty clearly, top quartile and 3x net are not synonymous, though they are often tossed around as identical. Clearing the top quartile bar may not guarantee enough returns!
Optimism is returning to VC world over the remained of the year, at least here in SF. Pitch wisely, EM friends 🙏
#startups #venturecapital #emergingVC #VCTVPI
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