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I looked at a16z portfolio [1] and could not find any "real" liquidity event, meaning IPO or big acquisition. There are a number of really high valuation compan
by boomzilla 12y ago
I looked at a16z portfolio [1] and could not find any "real" liquidity event, meaning IPO or big acquisition. There are a number of really high valuation companies, though, which are mostly based on the last round funding, often led by a16z. Now, a natural question is who exactly is benefiting from the high valuation? OK, certainly not the employees as most of them are not vested, and even if they have, they can't sell to anyone, and there is no cash dividend. The founders and top management sometimes can negotiate a better deals financially in these funding rounds [2], and in general can be resume boosters for them, so they do benefit somewhat from the high valuation. The LPs are not exactly getting anything at this time as the gain is not realized yet. That leaves the VCs who have a huge incentives to lead big rounds, as their incomes are proportional to the size of the funds they raise from LPs as detailed in this HBR article [3]. Given this dynamics, I am not surprised to see average startups with average products get funded at a hugely inflated valuation. I just hope that the LPs are investing with their own money, and are not retirement fund managers (specifically, not MY retirement fund).
[1] http://a16z.com/portfolio/ http://a16z.com/portfolio/
[2] http://allthingsd.com/20111001/vcs-unite-chamath-palihapitiya-decries-airbnbs-recent-112m-funding-for-excessive-founder-control-and-cashout-in-email/ http://allthingsd.com/20111001/vcs-unite-chamath-palihapitiy...
[3] http://blogs.hbr.org/2014/08/venture-capitalists-get-paid-well-to-lose-money/ http://blogs.hbr.org/2014/08/venture-capitalists-get-paid-we...
- joshu 12y agoBig events take proportionate longer. A16z simply hasn't been around long enough yet.
- RoboTeddy 12y agoOculus VR might count
- npalli 12y ago>> I looked at a16z portfolio [1] and could not find any "real" liquidity event, meaning IPO or big acquisition. Here are the exits for a16z. http://en.wikipedia.org/wiki/Andreessen_Horowitz#Exits http://en.wikipedia.org/wiki/Andreessen_Horowitz#Exits. Most of them were high profile exits.
- spuiszis 12y agoThe a16z website shows the current portfolio (most recent, un-exited investment) and does not display their entire investment history. If you check out their Crunchbase profile[1], they have already had some big exits with Groupon, Zynga, Skype and Instagram, which is quite impressive since they only started investing 3 years ago. I'm sure there have been some other medium/large M&A liquidity events as well but it usually takes 3-5 years to figure out if your VC portfolio is any good and 7+ years to realize any returns. LPs know this and funds usually have a 10 year life cycle, sometimes with options to extend it a year or two [2]. [1]http://www.crunchbase.com/organization/andreessen-horowitz/investments http://www.crunchbase.com/organization/andreessen-horowitz/i... [2]http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1118443616/ http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalis...
- diminish 12y agoactually even the current portfolio is impressive, only few of them ipoing would make a16z cherish. In addition, they have bold investments such as cyagenmod...