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>But that fund, USV 2004, has been one of the very best venture capital funds ever put together. The numbers are public because many (most) of our investors are

by jasode 10y ago

>But that fund, USV 2004, has been one of the very best venture capital funds ever put together. The numbers are public because many (most) of our investors are public pension funds who have freedom of information act (FOIA) obligations to report the performance of the funds they invest in. At that time (early 2000s), the big VCs in the bay area were kicking out FOIA obligated limited partners out of their funds. That was a huge win for us and we got a bunch of those FOIA obligated LPs into our fund. To contrast, Sequoia Capital is a famous example of a VC that doesn't allow LPs with FOIA obligations. Wow, I looked at Fred's linked pdf from the Oregon Public Employees Retirement Fund and saw some amazing IRRs: + Union Square Ventures 2004 fund +67.0% + Union Square Ventures 2008 fund +22.2% + Union Square Ventures Opportunity Fund (2010) +63.8% + Union Square Ventures 2012 fund +27.2% The Oregon table doesn't have the funds' total sizes. Fred volunteered that info in a different comment: https://www.cbinsights.com/blog/union-square-ventures-teardown/#comment-1521929070 https://www.cbinsights.com/blog/union-square-ventures-teardo...

ejcx 10y ago
Can someone explain these numbers? I looked at the spreadsheet: It looks like they put 25m in to the USV 2004 fund, and it became 294m. The financial terms are not familiar to me at all.
- arikr 10y ago
  In short, IRR is yearly rate of return. i.e. If 25mm becomes 50mm in 12 months, then the IRR (yearly rate of return) is 100%. Try searching up something like 'venture capital IRR explanation' and you should get more details.
  - sp332 10y ago
    So if $24 million becomes $26 million in one month, they say it's 100% IRR? Even though it's only up 8.3% and it's just as likely to go back down?
    - nostrademons 10y ago
      The footnote on the document says "Investments held less than three years generally have TVPIs and IRRs that are not meaningful, and are therefore labeled NM", and most of the post-2012 funds are labeled as such. IRR as a concept is used for any sort of investment, eg. if you buy an advertisement that will let you sell $X/month in additional product, you can calculate an IRR from that. It's used to compare different ways to invest your capital. You absolutely can use it over short durations (this is how the payday loan & credit card businesses operate - they compare the returns from loan fees vs. the cost of bad loans), but typically you want to use it on realized gains & losses, i.e. ones that have been converted to hard cash. On unrealized gains, you can run the calculation, but understand that uncertainty in payoff will be magnified by the time scale on which it operates.

by jasode 10y ago

ejcx 10y ago

Can someone explain these numbers? I looked at the spreadsheet: It looks like they put 25m in to the USV 2004 fund, and it became 294m. The financial terms are not familiar to me at all.

arikr 10y ago
In short, IRR is yearly rate of return. i.e. If 25mm becomes 50mm in 12 months, then the IRR (yearly rate of return) is 100%. Try searching up something like 'venture capital IRR explanation' and you should get more details.
- sp332 10y ago
  So if $24 million becomes $26 million in one month, they say it's 100% IRR? Even though it's only up 8.3% and it's just as likely to go back down?
  - nostrademons 10y ago
    The footnote on the document says "Investments held less than three years generally have TVPIs and IRRs that are not meaningful, and are therefore labeled NM", and most of the post-2012 funds are labeled as such. IRR as a concept is used for any sort of investment, eg. if you buy an advertisement that will let you sell $X/month in additional product, you can calculate an IRR from that. It's used to compare different ways to invest your capital. You absolutely can use it over short durations (this is how the payday loan & credit card businesses operate - they compare the returns from loan fees vs. the cost of bad loans), but typically you want to use it on realized gains & losses, i.e. ones that have been converted to hard cash. On unrealized gains, you can run the calculation, but understand that uncertainty in payoff will be magnified by the time scale on which it operates.