2025-04-26XQuote

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Super important reality highlighted here by @joshk, but I fear the real-life experience is even worse. With most of the contemporary equity incentive programs, companies experience 3-6% dilution annual EVEN IF the value of the company is flat or down. So time hits twice.

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I've spoken to a lot of VCs and GPs in my career - and here is what many of them miss: In venture, "how fast you win" matters just as much as "how much you win". Imagine if you ran a venture fund that has 4x gross return (top quartile performance) - with the following specifics: 100% of capital called evenly over first five years 1x distributed spread evenly over last half of fund life 1x distributed in the third-to-last year of fund life 1x distributed in the second-to-last year of fund life 1x distributed in the last-year of fund life If fund life is 10 years - this would generate around 27% IRR If fund life is 18 years - this would generate around 11% IRR Longer duration transforms a very strong multiple into an IRR that would have underperformed the S&P 500 over the last decade. Mick Jagger would be a lousy VC. Time isn't on your side.
joshk ↗