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I wonder how much of this dynamic is caused by the 10 year fund life? Would VCs respond the same way if the LPs gave them 15 years? Would VCs change the sort of
by danieltillett 10y ago
I wonder how much of this dynamic is caused by the 10 year fund life? Would VCs respond the same way if the LPs gave them 15 years? Would VCs change the sort of company they invest in?
- greglindahl 10y agoIn order to raise Fund N+1, a VC firm needs successful exits from Fund N. I had a startup whose exit timing was driven by our investors needing a successful exit so they could raise. A longer-lived fund would not have changed the timing.
- mason55 10y agoTheoretically you could try to shift it so that fund N was based on the exits from fund N-2. That way you don't have to the cohort in N-1 to exit so fast. The only difficulty would be the first couple funds where you'd have to push group 1 to exit so you could raise fund 2, then try to raise fund 3 on the exits of fund 1 plus the growth (but not exits) of fund 2.
- greglindahl 10y agoThe investors in question had raised many funds. I suspect their LPs were more interested in "what have you done for me lately" than anything about Fund N-2.