Answer(s) to Last Week’s Question(s):
1) What is most likely to change the conversation around unicorn companies?
- 20% A unicorn company going under
- 26% A pullback of private investment in later stages, forcing earlier exits
- 52% Tech bubble bursts
- 0% A new mythical name that replaces ‘unicorn’
- 2% Other
This Week’s Question(s):
An LP invests $100k in a Venture Fund and another $100k in a Syndicate. The Venture Fund is a standard 2/20 (mgmt fees on committed capital) structure w/ a 10-year life. The Syndicate lead takes a 15% carry and AngelList takes their 5% carry.
- Both the fund and the syndicate invest in the same 10 companies at the same terms
- Both the fund and syndicate invest at the same time in each company
- The fund invests the same amount in each company
- The syndicate invests the same amount in each company
- Out of the 10 investments made, five fail completely
- Two of 10 return at ~1x
- Two return at ~3x
- And one company has an out-sized return, yielding a total portfolio return of 5x on invested cash, for both the fund and the syndicate.
So the question is…