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A 1x return on a large investment like these would not be good for a venture fund. They probably need to return 3x on the whole fund to get their carry/bonus, s
by jartelt 8y ago
A 1x return on a large investment like these would not be good for a venture fund. They probably need to return 3x on the whole fund to get their carry/bonus, so a 3x return for a given investment is the bare minimum for success. They almost certainly would not have made these investments unless they believed they could make a return of >3x.
- smallgovt 8y ago> They almost certainly would not have made these investments unless they believed they could make a return of >3x. Softbank isn't like a traditional VC. They structured their fund like private equity where they retain a percentage of returns above x% per year. In addition to this, they take a 1% management fee regardless of returns. For most VC's, you'd expect the carry to represent the majority of incentive. But, Softbank is unique in that their fund is $100bn. They take home a hefty $1b in management fees regardless of how their portfolio performs. I wouldn't be surprised in the slightest if they make 'safe' bets for the sake of boosting their allocation numbers, even if they think there's a nil chance of 3x EV.
- jartelt 8y agoBird's latest round was led by Sequoia and Lime's latest round was led by GV, so I am not sure why the Softbank is relevant. Perhaps Softbank funds the next rounds, but GV and Sequoia are still going to be looking for a much bigger exit than 1x.