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I think later rounds generally have lower return expectations - if you assume the stock market will return ~10%/year, you probably only need it to 2X by IPO tim
by tqi 2y ago
I think later rounds generally have lower return expectations - if you assume the stock market will return ~10%/year, you probably only need it to 2X by IPO time (depending on how long that takes) for your overall fund's IRR to beat the stock market.
- mattmaroon 2y agoYou would if it were the fund’s only investment. But it won’t be. And this is still not a mature company, as their expenses currently vastly outnumber revenue, so there’s always a chance of failure. Your general sense that the later stage higher dollar figure raises look for a lower multiple than the earlier ones is correct, but they’d consider 2x a dud.