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Apr 23, 2015 · 22m · 20vc

20 VC 030: VC Funds, Angels and IPOs with John Taylor, Head of Research @ NVCA

John Taylor · 18m spoken Harry Stebbings · 3m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

Host Harry Stebbings interviews John Taylor, Head of Research at the National Venture Capital Association (NVCA), on episode 30 of The 20 Minute VC podcast. The discussion covers the mechanics of venture capital funds, changing Limited Partner demographics, extended startup exit timelines, and how venture partners manage limited bandwidth while delivering strategic value to portfolio companies.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 14.9% of the talking time here. How this is scored →

Harry as informed peer 2.0 Guest teaching 6.0 Guest disagreement 0.6 Harry pushing back 0.6
05100:0010:0020:001:14–7:12 · Harry as informed peer 1/10 Sources of Venture Capital Funds and LP Landscape Stebbings asks straightforward introductory questions regarding where VC funds originate and standard LP expectations. Taylor delivers an extensive industry primer on the transition from pension funds to family offices and explains LP return expectations using basis points and historical net returns.7:12–11:06 · Harry as informed peer 2/10 Partner Angel Investments and Long VC Fund Lockups Stebbings prompts Taylor with follow-up questions about partner angel investing and long lockup periods. Taylor educates the host with empirical data, detailing how the percentage of venture-backed companies going public dropped from 14% in the 1990s down to 5-6%.11:08–13:48 · Harry as informed peer 1/10 VC Investment Criteria and Partner Board Seat Limits Stebbings asks a general question about what VCs look for when making investments. Taylor cites NVCA and Dow Jones research showing that partner workload caps effectively at six board seats.13:49–16:11 · Harry as informed peer 3/10 Alternative Venture Models and Talent Value Add Services Stebbings challenges whether lean VC models like 500 Startups that forgo board seats qualify as active venture capital. Taylor offers mild resistance to the premise, noting that different value-add models exist alongside traditional board seats.16:12–22:22 · Harry as informed peer 3/10 VC Career Trajectories and Venture Firm Industry Consolidation Stebbings demonstrates industry familiarity by asking about pro rata rights and mega-rounds for hot companies like Uber. Taylor outlines industry consolidation and non-traditional capital expansion, citing multi-billion dollar private funding rounds.1:14–7:12 · Guest teaching 7/10 Sources of Venture Capital Funds and LP Landscape Stebbings asks straightforward introductory questions regarding where VC funds originate and standard LP expectations. Taylor delivers an extensive industry primer on the transition from pension funds to family offices and explains LP return expectations using basis points and historical net returns.7:12–11:06 · Guest teaching 6/10 Partner Angel Investments and Long VC Fund Lockups Stebbings prompts Taylor with follow-up questions about partner angel investing and long lockup periods. Taylor educates the host with empirical data, detailing how the percentage of venture-backed companies going public dropped from 14% in the 1990s down to 5-6%.11:08–13:48 · Guest teaching 6/10 VC Investment Criteria and Partner Board Seat Limits Stebbings asks a general question about what VCs look for when making investments. Taylor cites NVCA and Dow Jones research showing that partner workload caps effectively at six board seats.13:49–16:11 · Guest teaching 5/10 Alternative Venture Models and Talent Value Add Services Stebbings challenges whether lean VC models like 500 Startups that forgo board seats qualify as active venture capital. Taylor offers mild resistance to the premise, noting that different value-add models exist alongside traditional board seats.16:12–22:22 · Guest teaching 6/10 VC Career Trajectories and Venture Firm Industry Consolidation Stebbings demonstrates industry familiarity by asking about pro rata rights and mega-rounds for hot companies like Uber. Taylor outlines industry consolidation and non-traditional capital expansion, citing multi-billion dollar private funding rounds.1:14–7:12 · Guest disagreement 0/10 Sources of Venture Capital Funds and LP Landscape Stebbings asks straightforward introductory questions regarding where VC funds originate and standard LP expectations. Taylor delivers an extensive industry primer on the transition from pension funds to family offices and explains LP return expectations using basis points and historical net returns.7:12–11:06 · Guest disagreement 0/10 Partner Angel Investments and Long VC Fund Lockups Stebbings prompts Taylor with follow-up questions about partner angel investing and long lockup periods. Taylor educates the host with empirical data, detailing how the percentage of venture-backed companies going public dropped from 14% in the 1990s down to 5-6%.11:08–13:48 · Guest disagreement 0/10 VC Investment Criteria and Partner Board Seat Limits Stebbings asks a general question about what VCs look for when making investments. Taylor cites NVCA and Dow Jones research showing that partner workload caps effectively at six board seats.13:49–16:11 · Guest disagreement 2/10 Alternative Venture Models and Talent Value Add Services Stebbings challenges whether lean VC models like 500 Startups that forgo board seats qualify as active venture capital. Taylor offers mild resistance to the premise, noting that different value-add models exist alongside traditional board seats.16:12–22:22 · Guest disagreement 1/10 VC Career Trajectories and Venture Firm Industry Consolidation Stebbings demonstrates industry familiarity by asking about pro rata rights and mega-rounds for hot companies like Uber. Taylor outlines industry consolidation and non-traditional capital expansion, citing multi-billion dollar private funding rounds.1:14–7:12 · Harry pushing back 0/10 Sources of Venture Capital Funds and LP Landscape Stebbings asks straightforward introductory questions regarding where VC funds originate and standard LP expectations. Taylor delivers an extensive industry primer on the transition from pension funds to family offices and explains LP return expectations using basis points and historical net returns.7:12–11:06 · Harry pushing back 0/10 Partner Angel Investments and Long VC Fund Lockups Stebbings prompts Taylor with follow-up questions about partner angel investing and long lockup periods. Taylor educates the host with empirical data, detailing how the percentage of venture-backed companies going public dropped from 14% in the 1990s down to 5-6%.11:08–13:48 · Harry pushing back 0/10 VC Investment Criteria and Partner Board Seat Limits Stebbings asks a general question about what VCs look for when making investments. Taylor cites NVCA and Dow Jones research showing that partner workload caps effectively at six board seats.13:49–16:11 · Harry pushing back 2/10 Alternative Venture Models and Talent Value Add Services Stebbings challenges whether lean VC models like 500 Startups that forgo board seats qualify as active venture capital. Taylor offers mild resistance to the premise, noting that different value-add models exist alongside traditional board seats.16:12–22:22 · Harry pushing back 1/10 VC Career Trajectories and Venture Firm Industry Consolidation Stebbings demonstrates industry familiarity by asking about pro rata rights and mega-rounds for hot companies like Uber. Taylor outlines industry consolidation and non-traditional capital expansion, citing multi-billion dollar private funding rounds.

speaking balance: gold is Harry, purple is the guest (3 minute bins)

0:00 · Harry 45.2% · guest 54.8%0:00 · Harry 45.2% · guest 54.8%3:00 · Harry 11.8% · guest 88.2%3:00 · Harry 11.8% · guest 88.2%6:00 · Harry 6.2% · guest 93.8%6:00 · Harry 6.2% · guest 93.8%9:00 · Harry 5.5% · guest 94.5%9:00 · Harry 5.5% · guest 94.5%12:00 · Harry 7.8% · guest 92.2%12:00 · Harry 7.8% · guest 92.2%15:00 · Harry 16.4% · guest 83.6%15:00 · Harry 16.4% · guest 83.6%18:00 · Harry 5.2% · guest 94.8%18:00 · Harry 5.2% · guest 94.8%21:00 · Harry 26% · guest 74%21:00 · Harry 26% · guest 74%
Sharpest disagreement ▶ 13:50 Reframing non-board VC participation

Taylor gently rejects Stebbings' implicit premise that non-board lean VC firms aren't fully-fledged VCs, explaining that alternative platform models like Andreessen Horowitz provide significant value.

 Hardest push from Harry ▶ 13:49 Challenging lean VC model validity

Stebbings directly challenges whether managers using Dave McClure's 500 Startups model can truly be considered active VCs without taking board seats.

 Biggest teaching moment ▶ 3:26 LP return metrics and basis points

Taylor provides a comprehensive masterclass on institutional LP benchmark expectations, introducing 300 to 500 basis point premiums over public equities.

 Harry holds his own ▶ 19:38 Inquiring on pro rata rights

Stebbings demonstrates granular venture knowledge by specifically raising pro rata rights and early-stage dilution dynamics in competitive follow-on rounds.
the scores for every segment, with the reasoning behind each
ChapterTopicHarry as informed peerGuest teachingGuest disagreementHarry pushing backWhy
Sources of Venture Capital Funds and LP Landscape 1700 Stebbings asks straightforward introductory questions regarding where VC funds originate and standard LP expectations. Taylor delivers an extensive industry primer on the transition from pension funds to family offices and explains LP return expectations using basis points and historical net returns.
Partner Angel Investments and Long VC Fund Lockups 2600 Stebbings prompts Taylor with follow-up questions about partner angel investing and long lockup periods. Taylor educates the host with empirical data, detailing how the percentage of venture-backed companies going public dropped from 14% in the 1990s down to 5-6%.
VC Investment Criteria and Partner Board Seat Limits 1600 Stebbings asks a general question about what VCs look for when making investments. Taylor cites NVCA and Dow Jones research showing that partner workload caps effectively at six board seats.
Alternative Venture Models and Talent Value Add Services 3522 Stebbings challenges whether lean VC models like 500 Startups that forgo board seats qualify as active venture capital. Taylor offers mild resistance to the premise, noting that different value-add models exist alongside traditional board seats.
VC Career Trajectories and Venture Firm Industry Consolidation 3611 Stebbings demonstrates industry familiarity by asking about pro rata rights and mega-rounds for hot companies like Uber. Taylor outlines industry consolidation and non-traditional capital expansion, citing multi-billion dollar private funding rounds.

Statements from this episode (10)

Assertion Not checkable as stated
Aging populations prevent pension funds from committing to VC lockups
“But with the pensions now seeing aging populations, they're generally not in a position to be doing the 10 to 12 to 14 year lockup, which a venture capital fund typically is. They can't commit to that level time frame of the liquidity.”
John Taylor Apr 23, 2015 ▶ 2:42
Assertion Supported
Institutional LPs seek 300 to 500 basis points over public markets
“Lots of times you'll hear institutional investors saying that they want at least 300 to 500 basis points better than what they think they can do in the public market.”
John Taylor Apr 23, 2015 ▶ 3:54
Assertion Partly supported
Venture capital funds historically returned 25% to 30% net to LPs
“Historically, venture capital funds have returned to their investors net about 25 to 30%.”
John Taylor Apr 23, 2015 ▶ 4:22
Assertion Supported
Large institutional LPs cannot invest in small $20M to $40M funds
“A lot of the money's in the hands of very, very large institutions that can no longer put money into a 20 or 30 or forty million dollar venture fund. They just don't have, they just can't divide it up in that small a parcel.”
John Taylor Apr 23, 2015 ▶ 4:59
Assertion Supported
Biotech companies comprised the majority of venture IPOs from 2013 to 2015
“And you look at just in the past gosh, I mean, the past three years 2013, 20 14, 2015, and the interesting thing is that the majority of the IPOs in each of the That period where were biotech companies, which historically is only about 20% of the money, but ma…”
John Taylor Apr 23, 2015 ▶ 9:19
Assertion Supported
Fourteen percent of venture-backed startups in the 1990s went public
“If you go back to nine in the 19 nineties, And look at what percentage of the first fundings in the nineties ended up going public. It was 14%. So basically one in every seven companies that got a dime of venture financing went public.”
John Taylor Apr 23, 2015 ▶ 10:14
Prediction Didn’t hold up
Taylor predicts only 5% to 6% of recent startups will IPO
“Now, because it takes so long, it's very hard for us to know you know, what the current crop of companies or even the crop of companies eight or 10 years ago what their outcome will be. But my guess is it's going to be five Maybe six percent. It's just a much,…”
John Taylor Apr 23, 2015 ▶ 10:31
Assertion Partly supported
NVCA research finds venture capitalists max out capacity at six board seats
“We've done a study now, we did it back Right after the bubble, and we've revisited it once or twice with Dow Jones, looking to see what this, what a typical workload, a board level workload is of a venture capitalist, and the number comes back six, and it was …”
John Taylor Apr 23, 2015 ▶ 12:52
Assertion Supported
Active venture capital firm count dropped 30% between 2010 and 2015
“I think also you have to look at where venture is, and over the past four or five years, we, we've seen a reduction in the number of firms, a slight reduction in the amount of capital available, but A significant 30% reduction in the number of firms out there …”
John Taylor Apr 23, 2015 ▶ 17:10
Assertion Supported
Late-stage venture capital round sizes expanded by 40% to 50%
“And that is that the VCs themselves are coming to the table with roughly the same amount of money they have the past few years. But we're seeing the total amount invested, the total size of these rounds expanding by, you know, 40, 50%. The total amount of vent…”
John Taylor Apr 23, 2015 ▶ 18:23
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