Vaguely condescending blog posts by founders of financial firms about why top-tier financial reporters are underestimating their returns is a leading indicator that actual returns will be even worse than the reporting implies.
"When the facts are against you, argue the law; when the law is against you argue the facts. When both are against you, call the other lawyer names."
For financial services the equivalent would be either talking your portfolio or your returns. In this case, the mark-to-market portfolio looks bad and the returns look bad, so they've resorted to arguing with newspapers.
Not necessarily. VCs' lawyers are big big sticklers for preserving their Reg D exemption from SEC registration, which is contingent upon no general solicitation.
If AH wants to be able to sell any LP interests in the next 12 months they are going to be very, very careful not to state any performance figures, particularly the trumpet-able kind.
(Exception: there do appear to be firms who are cavalier about this kind of thing, mainly seemingly new or nontraditional firms. But if you have DLA or Gunderson or Proskauer or whoever it is these days advising you, they are not going to be cool with you possibly blowing your Reg D in order to have a twitter feud with a reporter.)
no you won't, the VC doesn't report to a random reporter and numbers change all the time (WhatsApp last public valuation was of 1.5 billion (Sequoia held them at this position) and it sold for 19 billion)
That doesn't even make any sense. The average actual life of a VC fund is, according to numbers I got from NVCA a couple years back, over 16 years (despite being originally targeted at 8-10 years). If you wait until a fund is "closed," you are going to be waiting a long, long time.
The industry already has standard measures for talking about performance of a fund from different perspectives. I fear that HN is reinventing several wheels here.
For example, TVPI, Total Value to Paid-In, includes "marks" (which the VCs strongly influence, but ultimately have to be signed off on by auditors). But every savvy industry person would also look at DPI, Distributed to Paid-In, which includes only actual cash (and marketable securities) distributed to investors, and as such is much less susceptible to gaming.
It would be the scalar fallacy to believe that you can reliably compare any two funds' mid-life performance with a single metric. A high DPI fund is much more certainly a performer, but might have less residual value in the portfolio; likewise, a very high TVPI fund (but with low DPI) might have a ton of realizable value or it might just have unrealistic marks. (Finally, neither of those measures accounts for time value of money.)
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Vaguely condescending blog posts by founders of financial firms about why top-tier financial reporters are underestimating their returns is a leading indicator that actual returns will be even worse than the reporting implies.
Huh, that's an interesting correlation. What examples led you to notice it? Have you found a way to make money from this?
"When the facts are against you, argue the law; when the law is against you argue the facts. When both are against you, call the other lawyer names."
For financial services the equivalent would be either talking your portfolio or your returns. In this case, the mark-to-market portfolio looks bad and the returns look bad, so they've resorted to arguing with newspapers.
If you have hard numbers showing the reporter is wrong, you will trumpet them. If not, you won't. Sadly shorting VCs is hard.
Not necessarily. VCs' lawyers are big big sticklers for preserving their Reg D exemption from SEC registration, which is contingent upon no general solicitation.
If AH wants to be able to sell any LP interests in the next 12 months they are going to be very, very careful not to state any performance figures, particularly the trumpet-able kind.
(Exception: there do appear to be firms who are cavalier about this kind of thing, mainly seemingly new or nontraditional firms. But if you have DLA or Gunderson or Proskauer or whoever it is these days advising you, they are not going to be cool with you possibly blowing your Reg D in order to have a twitter feud with a reporter.)
no you won't, the VC doesn't report to a random reporter and numbers change all the time (WhatsApp last public valuation was of 1.5 billion (Sequoia held them at this position) and it sold for 19 billion)
The return the LPs got on their money in the last fund you closed out is a hard number.
That doesn't even make any sense. The average actual life of a VC fund is, according to numbers I got from NVCA a couple years back, over 16 years (despite being originally targeted at 8-10 years). If you wait until a fund is "closed," you are going to be waiting a long, long time.
The industry already has standard measures for talking about performance of a fund from different perspectives. I fear that HN is reinventing several wheels here.
For example, TVPI, Total Value to Paid-In, includes "marks" (which the VCs strongly influence, but ultimately have to be signed off on by auditors). But every savvy industry person would also look at DPI, Distributed to Paid-In, which includes only actual cash (and marketable securities) distributed to investors, and as such is much less susceptible to gaming.
It would be the scalar fallacy to believe that you can reliably compare any two funds' mid-life performance with a single metric. A high DPI fund is much more certainly a performer, but might have less residual value in the portfolio; likewise, a very high TVPI fund (but with low DPI) might have a ton of realizable value or it might just have unrealistic marks. (Finally, neither of those measures accounts for time value of money.)