Fladgate LLP’s Post

You can debate James Heath's assumptions forever. But, the mathmatical gravity holding down large, early stage funds remains the same. Reality: To get the exit multiples required to hit IRR targets, you have to do two things. Pick the right companies (hard enough) and exit them at exactly the right time (which gets tougher the bigger you are). A big fund may (sometimes, maybe) have advantages in company selection and in its ability to retain control over time. But as we return to the reality of more volatile interest rates and equity markets, smaller VC funds with timing flexibility have the advantage. #venturecapital #startups #lps

VC model is quite challenging

👇 The TRUE extent of the challenge behind raising a large early stage VC fund and why early stage investing is suited to SMALLER funds: VC is an outlier asset class where 80% of the returns come from a small (10%) number of investments made It's a high risk high reward asset class and so LPs need to see a clear path to substantial returns (>3.0x net) before investing 😳 Assuming a $650m fund size, e.g. Accel's announced yesterday, LPs will need c.$20 BILLION in exits to see a 3.0x net return Possible, but challenging 🔥 My opinion? $100m funds are the sweet spot between getting material ownership in companies at entry and being small enough not to rely on the extreme outcomes. #VC #venturecapital

Big shout out to Peter Walker and the rest of Nicole Baer's team at Carta for releasing their report on VC fund performance last week. Some really insightful data on the emerging manager space, data which is incredibly hard to come by. Here are three key takeaways... 1️⃣ Deployment Slowdown: 2022 vintage funds have only deployed 43% of their capital after 24 months. As a Fund of Funds investor, focusing on funds with disciplined capital deployment strategies is crucial in navigating this slower investment climate. 2️⃣ Increased Reliance on Bridge Rounds: With over 40% of Series A fundraising in Q1 2024 coming from bridge rounds, it’s clear that startups are seeking alternative financing strategies to extend their runways in a tighter funding landscape. [This lines up with what we've witnessed within our portfolio.] 3️⃣ Fading DPI: With less than 10% of 2021 funds returning capital to LPs, selecting proven managers adept at navigating challenging exit environments is pivotal. A proven track record is key!

The interplay between family offices and Venture Capital (VC) has witnessed a signifiant shift of late. The global economic downturn and evolving market dynamics are just two factors that have made these two sectors, traditionally perceived as distinct in their approaches and objectives, far more connected. Concentric founder and Simple Expert, Kjartan Rist, shares his insight on the synergies between the two worlds and how things look for 2024 and beyond. https://bit.ly/4aNotBh #FamilyOffice #WealthManagement #VentureCapital #PrivateWealth

we need to indeed work on #diversity - a fair allocation of resources. It's a diverse world and its time for #equitable allocation of #funding and #resources. Roy Swan thanks for sharing the below

It’s interesting to compare raising capital now to the COVID economy. During the pandemic: - Everyone was home, including VCs and angel investors with nothing to do. - VCs had tons of money to invest and nowhere to spend it. In those circumstances, founders were able to raise money off a deck or a one-pager. It was insane. No one can predict the future, but I doubt those days are coming back. I imagine it’s very difficult for founders to raise capital now without serious traction. If you want to avoid angels and raise significant capital from a VC firm, you’re going to need something special to get their attention.

I am now convinced that five years is the appropriate amount of time for staying in an African technology company if you are an early stage investor or angel investor. Anything beyond 5 years and exit becomes a very difficult and arduous process. If the company doesn’t make it to a plausible exit by year 5 you should write it down. Take the exit opportunities you see between years 3-5 very seriously and only leave behind what you can let ride. Remember the metric that defines your fund is DPI not IRR or MOIC.

Global private equity firm appoints local head Global private equity firm Advent International has poached Beau Dixon (pictured) from local firm Anchorage Capital Partners to lead its new Australia and New Zealand office. Read more about this, and much more about private equity and venture capital, at: https://lnkd.in/gE-aPUTb #privateequity #venturecapital