De Rycker: Blindly exercising pro-rata rights severely damaged VC fund performance
Sonali De Rycker · Sonali De Rycker | How I Became a Partner at Accel; Type 1 vs. Type 2 Mistakes | 20VC #902 · 20VC with Harry Stebbings · Jun 27, 2022 · at 43:21
Sonali De Rycker, Partner at Accel, discusses how automatic pro-rata participation without rigorous evaluation dilutes returns across venture capital funds.
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“The biggest mistakes were people just putting a lot of pro rata money in or just following in and supporting companies. So you get your outliers, but then if a lot of your percentage of your fund goes into companies that actually don't return capital because you've just been supporting them blindly, you have these, you know, you have the return here and then you have the loss here and it adds up to a pretty average fund.”
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