The traditional '2 and 20' venture capital fee structure is being viewed as outdated by fund in India, prompting a shift towards more flexible models that align better with domestic investor expectations 2% fee made sense when funds were smaller, around $100 Mn in corpus. However, with fund sizes now exceeding $1 Bn and lasting up to 15 years, management fees have surged. Over time, these fees can eat up 37%-38% of the capital, leaving less than 60% for actual investments. To meet investor expectations of a 5x return, funds would need to generate 9x or more on their invested capital—an increasingly difficult feat. Globally, there’s growing concern that the “2 and 20” model disproportionately benefits fund managers while leaving LPs with limited returns. Investors are now pushing to change this model. The best LPs are those that understand the importance of the end destination and not necessarily the journey. And when fund structures are aligned to maximise returns for LPs, this also maximises carried interest for GPs, creating something of a win-win. https://lnkd.in/gEDDUUMm
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Key Investment Criteria for Venture Capital (VC) / Private Equity (PE) Funds Venture Capital (VC) / Private Equity (PE) Funds are looking for investment in enterprises offering potential for attractive growth and earnings. Indicative Investment Criteria are : High Entrepreneurial Drive : VC & PE Funds will consider an investment opportunity only where they find high entrepreneurial drive in the promoters of the company and who have ambition to take the company to the next level. For the purpose, presence of strong top management team with proven ability will get due consideration. High Scalability & Non-cyclical Business : VC & PE Funds are looking for businesses which have high scalability and can reap dividend by quickly and cost effectively reaching to its target customers. They would be interested in sectors which are relatively insulated from periodic downturn of the economy. Sustainable Competitive Advantage : VC & PE Funds prefer to invest in innovative business models with a sustainable competitive advantage. A Clear Exit Plan : They seek to invest in ventures with clear strategy for exit within a reasonable time period in order to create and realize the value in the investment. Mode of Investment : VC & PE Funds would invest primarily by way of investments in privately negotiated equity / equity related and / or convertible / non-convertible debt instruments in unlisted companies. They shall also endeavor to provide mentoring support and other value additions to enable the investee companies achieve rapid growth and achieve / maintain their competitive edge in international markets. #startup #funding #vc #pe #venturecapital #privateequity
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Venture Capital returns outstrip all other types of private equity, according to this study published in IFA Magazine. A key advantage being that as an asset class, it doesn't require leverage to generate returns. Read more: https://lnkd.in/eXpKAeNm
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#Opinion | Venture capital faces challenges with low exits and extended fund lifespans, while India’s IPO market thrives with over 250 listings in three years. VCs must encourage public offerings to sustain liquidity and investor trust. Learning from the West's pitfalls is vital for a robust ecosystem, writes Akash Prakash. #venturecapital #india #ipo https://mybs.in/2dZkju4
The state of global venture capital: India must avoid Western pitfalls
business-standard.com
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Two of the five alternative investment types that I am going to combine are similar but of course different.... Private Equity and Venture Capital. The truth is it's all private equity... just riskier... Private equity in it's purest form invests capital into an entity that is not publicly listed or traded. Venture capital focuses on promising ideas/companies that have significant growth potential. People will fight me and say they are different, but when you look under the hood the only difference is capital contributed and the percentages negotiated. The key when analyzing firms that use blind pools of capital is that you believe in the sector they are reaching for, because if they are scattered across different sectors, there is a good chance they are scattered behind the scenes. Unless they have clear heads of sectors of course, but then that usually means they are in separate funds.
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2024 has been the worst year for private equity and venture capital (PE-VC) investments in India since 20191. With just over a month left in the year, the total PE-VC investments are unlikely to reach the $32.8 billion mark set in 2023, standing at $25.6 billion as of October. Several factors, including a decline in mega deals exceeding $100 million and global geopolitical issues, have contributed to this downturn. https://lnkd.in/gjxxsr5p
Private equity-venture capital funds dry up: Worst year since 2019 - Times of India
timesofindia.indiatimes.com
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New Post: LPs rekindle romance with VC funds - Despite a distribution drought and poor performance, institutional investors remain interested in venture capital (VC) funds, as revealed in a recent survey by Venture Capital Journal. This year's survey indicates a positive shift, with 33% of investors planning to increase VC investments, up from 20% last year. Notably, 48% anticipate making more commitments to private markets. While 63% of LPs reported their VC funds underperforming against benchmarks, optimism is rising, with 38% expecting future outperformance. Additionally, interest in late-stage/growth funds is increasing, and 67% of LPs are open to backing emerging VC managers, showcasing a more favorable outlook overall. Read the full article here https://lnkd.in/dRTARXnB #Venturecapital #VC #investment #LP #Limited Partner
LPs rekindle romance with VC funds
blog.excluto.com
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Private equity and venture capital investment in the UK plummeted post-2021. Stay informed about the latest trends in investment. #UKinvestment #PrivateEquityVentureCapital
Private equity and venture capital investment into the UK has crashed since 2021
uk.finance.yahoo.com
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'Private equity and venture capital investments have decreased to $39 billion according to Bain & Company's latest report. Find out more about this significant shift in investment trends. #PrivateEquity #Investments #VentureCapital'
Private equity, venture capital investments soften to $39 billion: Bain & Company
thehindu.com
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Venture Capital Investment Market Report 2024-2032: Growing Emphasis on Sustainability and Green Finance #VC #VentureCapital #Finance #Investing
Venture Capital Investment Market Report 2024-2032: Growing Emphasis on Sustainability and Green Finance
prnewswire.com
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According to new analysis, VC funding is on the rise again in 2024 after a strong comeback in the second half of 2023. Last year saw nearly £17 billion raised, with early-stage investing leading the way and breakout-stage investment exceeding pre-pandemic levels by 110%. Find out more: https://shorturl.at/loAGZ #VCFunding #BreakoutStageInvestment
Could 2024 Be the Year of Recovery for UK VC Investment?
https://www.digit.fyi
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