Newsletter 8: Q&A (answer for FREE ticket to PreMoney)


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…

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Issue 9 Question of the Week
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Does the LP make a larger return on the $100k invested in the fund or the $100k invested in the Syndicate?
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