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Highlights:
Myth of Small Fund Outperformance: David Clark challenges the belief that smaller venture funds consistently outperform larger ones, noting limitations in available data and survivorship bias.
Survivorship Bias in VC Data: Many underperforming funds don't report their results, skewing datasets like PitchBook and Cambridge. Clark highlights Carta as a potential unbiased source for small fund performance data.
Power Law Dynamics in Venture Capital: Vencap's data shows that even growth funds exhibit power law outcomes, with 1.6% of their investments being fund returners—higher than early-stage funds (1%).
Focus on Top-Performing Managers: Over 90% of Vencap's capital goes to 12-13 managers who have a track record of consistently backing fund-returning companies.
Venture vs. Private Equity: Venture funds show stronger persistence of returns compared to private equity, with top-quartile funds often repeating their success.
Fund Size Considerations: Vencap evaluates whether fund sizes align with the ability to back companies that generate massive returns. Excessively large funds can dilute performance potential.
State of Venture Post-2020 Election: While short-term political changes may influence sentiment, Clark emphasizes focusing on long-term relationships with top managers and founders.
Valuation Practices in Venture: Skepticism over inflated venture fund valuations is warranted, but Clark sees signs that portfolios may now be undervalued.
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Guest Bio:
Our Podcast now receives more than 200,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at [email protected].
We’d like to thank @ReedSmith for sponsoring this episode!
#VentureCapital #VC #Startups #OpenLP #AssetManagement
--
SPONSORS:
--
Stay Connected:
Links
Questions or topics you want us to discuss on How I Invest? Email us at [email protected].
4.3
4848 ratings
Highlights:
Myth of Small Fund Outperformance: David Clark challenges the belief that smaller venture funds consistently outperform larger ones, noting limitations in available data and survivorship bias.
Survivorship Bias in VC Data: Many underperforming funds don't report their results, skewing datasets like PitchBook and Cambridge. Clark highlights Carta as a potential unbiased source for small fund performance data.
Power Law Dynamics in Venture Capital: Vencap's data shows that even growth funds exhibit power law outcomes, with 1.6% of their investments being fund returners—higher than early-stage funds (1%).
Focus on Top-Performing Managers: Over 90% of Vencap's capital goes to 12-13 managers who have a track record of consistently backing fund-returning companies.
Venture vs. Private Equity: Venture funds show stronger persistence of returns compared to private equity, with top-quartile funds often repeating their success.
Fund Size Considerations: Vencap evaluates whether fund sizes align with the ability to back companies that generate massive returns. Excessively large funds can dilute performance potential.
State of Venture Post-2020 Election: While short-term political changes may influence sentiment, Clark emphasizes focusing on long-term relationships with top managers and founders.
Valuation Practices in Venture: Skepticism over inflated venture fund valuations is warranted, but Clark sees signs that portfolios may now be undervalued.
--
Guest Bio:
Our Podcast now receives more than 200,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at [email protected].
We’d like to thank @ReedSmith for sponsoring this episode!
#VentureCapital #VC #Startups #OpenLP #AssetManagement
--
SPONSORS:
--
Stay Connected:
Links
Questions or topics you want us to discuss on How I Invest? Email us at [email protected].
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