3 ms·
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
by 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 agoIn 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 agoSo 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 agoThe 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.