Colin McGrady’s Post

Good article on the Venture Capital Power Law by Clint Korver. - VCs live on tail events :) "Returns in venture capital are distributed according to a Power Law with the lion’s share of returns earned from a small number of investments. The data demonstrate this distribution to be true across the industry and even within firms. In short, VCs cannot reliably pick winners. They can, however, construct portfolios that consistently generate great returns." #venturecapital

Navigating the venture capital investment landscape can be a lengthy process, with the average time from initial funding to exit increasing by 2.5x since the early 2000s. Given the subdued exit landscape and the market's demand for a greater variety of liquidity opportunities, both investors and founders are turning to secondary transactions to achieve liquidity before a sale or IPO. In the 19th instalment of Orrick's Founder Series, Jamie Moore and Kristy Hart offer top tips to help UK startups navigate the increasingly popular world of secondary transactions.   https://lnkd.in/eEPpRu9D #VentureCapital #SecondaryTransactions

Investor TCV raises $3bn to back growth-stage start-ups. During the pandemic there was a significant pullback from venture investing and this has continued over the last few years with challenges still faced, uncertainty remaining and loss making entities falling out of favour. The tide seems to have turned with inflation, in most jurisdictions, pulling back, optimism about global growth increasing and the need for Innovation and R&D being top of the list to support growth. The opportunity that now presents itself is depressed valuations, so the ability to pick up venture assets at great value. From a entrepreneur, founder and venture creation perspective you are also dealing with teams that have managed to successfully navigate the challenges faced in the market, the proven business acumen and resilience will also boost appetite. #leadership #strategy #finance #venturecapital #governance https://on.ft.com/3V6hsnV via @FT

The loss-making #startup growth model in non-asset based category is in deep trouble, at least for now. The combination of large portfolios and low exits suggests that a massive turnaround in tech IPOs is needed to return VC to the performance that underpins its reputation. Over the last decade, the rate of distributions-to-NAV at US VC firms averaged 17.1%. #bootstrapped #valueovervaluations

⚖️ Private Equity and Venture Capital firms… is there a difference? Also referred to as “PE” and “VC”, these are two types of private investment firms that predominantly target unlisted companies. The two are often confused for three reasons: 🔹 Venture Capital is a form of Private Equity 🔹 Both frequently represent the same investment class 🔹 Both invest strongly in technology What sets them apart is timing. Private equity firms focus on late-stage start-ups and scale-ups, whereas venture capital firms will start investing much earlier. If you’re ready to prime your company to grow - but you don’t want to lose control of it - we have an international team ready to sit down with you and talk you through the whole process ☕️ 🔗 Visit our website to find out more https://loom.ly/KnMCM6Y #privateequity #lawfirm #venturecapital #legaladvice #finance

Venture capital is not supposed to have become #subprime micro-private equity. Furthermore, the risk profiles of private equity and #venture capital are polar opposites.

Venture capital is not supposed to have become #subprime micro-private equity. Furthermore, the risk profiles of private equity and #venture capital are polar opposites.

1. Generally not a big fan of ventures paying for services with equity. 2. A lot of venture firms offer a certain level of portfolio company support - my impression is that in many cases the services leave a lot to be desired. That said, if the services are defined in a detailed statement of work with defined deliverables, as The General Partnership evidently does, worth considering. However, no venture wants to be in a position of having to sue its investor for failure to deliver promised services. A venture would have to do significant due diligence on the general quality of the VC's services to get comfortable.

We’re pleased to share the latest 𝐀𝐮𝐦𝐧𝐢 𝐕𝐞𝐧𝐭𝐮𝐫𝐞 𝐁𝐞𝐚𝐜𝐨𝐧, our biannual report on venture capital. We invite you to explore our 𝟒𝟗 𝐜𝐡𝐚𝐫𝐭𝐬 and corresponding insights on the state of fundraising. This third edition of the Beacon goes deeper than ever before into the nuanced complexities of the venture capital industry, and for the first time, we present a data-driven view of limited partnership agreements, their economic and legal terms, and their relationship with fund investment mechanics. Some highlights: 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐬𝐭𝐚𝐫𝐭𝐞𝐝 𝐭𝐨 𝐫𝐞𝐜𝐨𝐯𝐞𝐫 𝐚𝐟𝐭𝐞𝐫 𝐚 𝐦𝐮𝐭𝐞𝐝 ~𝟏𝟖 𝐦𝐨𝐧𝐭𝐡𝐬: Between Q3 and Q4 2023, median post-money valuations started to increase for all stages, with the greatest QoQ increases coming in Series B and Series D+ rounds. 𝐖𝐢𝐝𝐞𝐫 𝐫𝐚𝐧𝐠𝐞 𝐨𝐟 𝐨𝐮𝐭𝐜𝐨𝐦𝐞𝐬 𝐢𝐧 𝐥𝐚𝐭𝐞-𝐬𝐭𝐚𝐠𝐞 𝐯𝐬 𝐞𝐚𝐫𝐥𝐲-𝐬𝐭𝐚𝐠𝐞: The distribution of post-money valuations shows that the range of outcomes has narrowed for early-stage deals but widened in late-stage, implying growing uncertainty at the mature-end of the market.   𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐢𝐧𝐠 𝐩𝐫𝐞𝐯𝐚𝐥𝐞𝐧𝐜𝐞 𝐚𝐧𝐝 𝐦𝐚𝐠𝐧𝐢𝐭𝐮𝐝𝐞 𝐨𝐟 𝐝𝐨𝐰𝐧 𝐫𝐨𝐮𝐧𝐝𝐬: Not only is the prevalence of down rounds increasing, but the magnitude of down rounds rose across most stages YoY. 𝐕𝐂 𝐟𝐢𝐫𝐦𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐢𝐧 𝐟𝐞𝐰𝐞𝐫 𝐝𝐞𝐚𝐥𝐬 𝐩𝐞𝐫 𝐪𝐮𝐚𝐫𝐭𝐞𝐫: Firm investment velocity remains subdued, and as VC firms invest at a slower rate, the average time between investment rounds has also increased. 𝐒𝐢𝐠𝐧𝐬 𝐨𝐟 𝐚 𝐦𝐨𝐫𝐞 𝐟𝐚𝐯𝐨𝐫𝐚𝐛𝐥𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐞𝐧𝐯𝐢𝐫𝐨𝐧𝐦𝐞𝐧𝐭 𝐟𝐨𝐫 𝐋𝐏𝐬:  Limited Partnership Agreements (LPAs) reveal how investments are being structured between General Partners (GPs) and Limited Partners. (LPs). LPA terms appear to have become increasingly favorable for LPs. Read it here: https://lnkd.in/gvjcaG3S See disclaimers: https://lnkd.in/emsViBEN #VentureCapital #PrivateMarkets

Venture capital is not supposed to have become #subprime micro-private equity. Furthermore, the risk profiles of private equity and #venture capital are polar opposites.