Comments on: Does the Size of a VC Fund Matter?

By: David Semeria

David Semeria — Sun, 04 Apr 2010 01:17:48 +0000

Great point about this post breaking new ground. I can't remember any similar posts on the various VC blogs.

Quick question for Mark: is it possible for a VC's investment in a company to span vintages? My initial feeling would be: in theory yes, in practice less likely…

By: David Semeria

David Semeria — Sun, 04 Apr 2010 01:17:48 +0000

Great point about this post breaking new ground. I can't remember any similar posts on the various VC blogs.

Quick question for Mark: is it possible for a VC's investment in a company to span vintages? My initial feeling would be: in theory yes, in practice less likely…

By: David Semeria

David Semeria — Sat, 03 Apr 2010 20:17:48 +0000

Great point about this post breaking new ground. I can't remember any similar posts on the various VC blogs.

Quick question for Mark: is it possible for a VC's investment in a company to span vintages? My initial feeling would be: in theory yes, in practice less likely…

By: msuster

msuster — Sat, 03 Apr 2010 08:12:28 +0000

Thanks, Roy. Good points. I'm going to cover some of these topics in future posts so I'll leave it for now.

By: msuster

msuster — Sat, 03 Apr 2010 08:11:20 +0000

All three of your points seem about right. Thanks for the contribution.

By: msuster

msuster — Sat, 03 Apr 2010 08:10:13 +0000

Yes, performance of the fund matters. If they've already exited a number of investments they're more likely to be able to raise another fund and therefore less under pressure to see an exit from your company.

By: msuster

msuster — Sat, 03 Apr 2010 08:08:49 +0000

Mezz rounds seem more common these days and often have an amount of “founder liquidity.” But one other point I'd like to make … some VC's will sell their portfolios to “secondary investors.” This happened after the dot com crash, too. The way this works is that if a VC has 12 remaining investments a secondary fund will give them a certain amount of pennies on the dollar for all of their companies. That could mean 20 cents on the dollar or 50-60 cents on the dollar. In this case the startup isn't immediately impacted financially but might find that they have another “wife” or “husband” than they expected at the time they got married. This one might be prettier or might be a drunk.

By: Roy Rodenstein

Roy Rodenstein — Sat, 03 Apr 2010 04:03:12 +0000

Great overview of a very advanced and litte-discussed topic. Unfortunately even knowing the answers to all these questions things can get messy over time. A company in your vintage may need a $100M round and greatly exceed its reserve, or your company may go long enough that its vintage fund gets cramped and you may get painted into a corner for followons. Even more complicated, VCs often invest from multiple funds or sub-funds into a single deal. So as an entrepreneur it's hard to navigate those waters over time. As usual the rule is, if you're doing well, they'll find the money for your next round.

By: msuster

msuster — Sat, 03 Apr 2010 03:12:28 +0000

Thanks, Roy. Good poitns. I'm going to cover some of these topics in future posts so I'll leave it for now.

By: msuster

msuster — Sat, 03 Apr 2010 03:11:20 +0000

All three of your points seem about right. Thanks for the contribution.