"3.6x" math is not accurate. If I have time, I'll write a longer explanation (full disclosure - I'm a partner at a VC firm). Short version - returns are calcul

"3.6x" math is not accurate. If I have time, I'll write a longer explanation (full disclosure - I'm a partner at a VC firm). Short version - returns are calculated from the moment of investment to the moment of exit, so getting a 2x in 1 year is a 100% IRR. You do not spread it out over 10 years. LPs get their money back and deploy it in other asset classes, so the return clock for those dollars has stopped. Yes, management fees go out every year (at least for the first five or so years), so that works against short holds, but for the most part a fast exit is never a bad thing, unless the cash on cash multiple is really low. There's a tension in both funds and LPs as to which metric is more important, IRR (which rewards fast exits, even at low multiples) or multiple of invested capital (which rewards holding out for more cash out, even if it takes a lot longer). GPs generally have an incentive for the latter. LPs sometimes prefer the former. To the original author, if you're a HN reader - most people, myself included, would happily share our perspective as fund managers. It would have been worthwhile for you to do so, before you posted the blog post. Understanding fund economics is definitely a good thing for entrepreneurs, and I applaud those like Fred Wilson that have tried to make it more transparent, but don't count on blog posts from Fred or others to fill in all the gaps; go out and ask some people yourself.