So Carta has some of its latest data on VC performance and it’s pretty interesting:
There’s a lot going on this chart but let me break it down from a founder perspective:
- The median 2017 fund is 7 years into a 10-14 lifetime — and is sitting at 1.8x “TVPI”
- But it’s not quite that good. Because that’s before fees and expenses. So back out 20%. So really, the median fund sits closer to 1.4x to its own investors, the Limited Partners. On paper.
- And what’s the goal? 4x TVPI. That gets you to 3x after fees to the VC’s own investors.
- That’s what it takes to beat Nasdaq materially.
So the media fund isn’t close to hitting its goal. Now this isn’t new in venture, but 2017-2018 actually were pretty good times to invest. And there is still time. The best funds keep appreciating in absolute terms (even if their IRRs come down).
But it does show just how hard it is to do well in venture. The median 2017 fund is up after 7 years. But not by enough. And not by all that much.
And interesting, this stacked chart shows 2020 funds and 2021 funds … when things got a bit loopy in venture … aren’t looking too good. You can see VC funds start off negative as they incur expenses, but they go positive and come out of the “J-curve” in a year or two (or longer) as investments gain in value:
This is about all you need to know about the VC industry as a founder. But here are the real numbers. The median 2017 fund is making money on paper, but not enough. And 2020 and 2021 funds look a little … rough right now. Maybe a lot rough.
More here from Carta:
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Jason Lemkin, Khareem Sudlow
