The Ledger
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David Clark has never seen a 3% fee and 30% carry VC fund
“Two and a half. I'd have to double check that, but I'm pretty sure there's nothing that I've seen that's a three and 30.”
Clark: Early-stage loss ratios will return to 60%, causing widespread startup failures
“My sense is that it's going to go back to the average. It's going to go back to that sort of 60%. So I think there's a lot of pain still to be had. So that's not just companies who are going to get see their values reduced. I think there's a lot that ultimatel…”
VenCap's early, growth, and non-US funds yield nearly identical aggregate TVPI
“We looked at what's the performance of the early stage US funds from our core managers from 2005 onwards. What's the performance of the growth funds from our core managers from 2005 onwards? What's the performance of the non-US funds from 2005 onwards from our…”
Clark: A Venture Manager's First Hit Is Random, But Repeatable
“So, again, going back to some of the academic data that's out there, it does suggest that that first success is actually random, but once you've had that first success, There's a high likely or higher likelihood that you can then leverage it and start that vir…”
Clark: VenCap last added a net-new fund manager in 2018
“Our last one was probably 2018. And it was a fund 18.”
Clark: Newer VC managers maintain last-round marks while established managers write down
“From newer managers, one of the things we look at are where are they holding their marks, and generally we've seen the new managers holding last round value marks, and not writing anything down, where it's the more established managers that are perhaps earlier…”
Clark: 45 Venture Investments Have Returned $1B+ to a Single Fund
“So we had a look at our data and we found 45 investments that have returned a billion dollars to the single fund that invested and were also fund returners.”
Under 3% of VenCap venture fund investments lose capital over 30 years
“What we found is less than three percent of those funds haven't, are showing a TVPI of less than one X. And this is going back Some of those funds are going back 30 years. So that's through the dot-com boom and bust. It's through the financial crisis.”
VenCap's top-performing fund of the past 15 years is a growth fund
“Our best performing core manager fund in the last 15 years as a growth fund.”
Clark: VenCap declines existing VC managers only for performance and succession
“I think that the two reasons we don't do, the two reasons we would say no to an existing manager would be performance and succession.”
VenCap core fund managers deliver ~3.5x aggregate net multiple
“So we have a group of a dozen core managers and, you know, like, 90% of all the capital we've invested over the last decade plus has gone to those managers. And when we look at the performance of their mature funds, so let's take away the ones that were raised…”
David Clark: VenCap managers backed 85% of top VC exits over 6-7 years
“And so when I look back at the best VC exits over the last six or seven years, The managers that we've backed have been in 85% of the top 20 or 30 exits there.”
Clark: LPs will wait 18-24 months for liquidity after IPOs resume
“So even if we start to see IPOs in the second half of this year, it's going to be six months before those shares become freely tradable and again, it will probably be another 12 to 18 months before those positions ultimately get fully distributed.”
Clark: VenCap Has Never Invested in a Manager Who Pitched Them Directly
“We have, I want to say we've never invested in a manager that has come into us directly.”
Clark: VenCap typically enters VC manager relationships at Fund III
“The earliest we would intercept a manager would probably be fund three. And that's where we've had the most success historically. So if I look at our 12 managers, probably half of them we ended up doing it from three.”
David Clark: VenCap Backs Venture Firm With Mandatory Age-Based Retirement
“So there's one of the managers that we back that have a, that has a policy that says once you get to a certain age, you're out unless you're invited by the rest of the partners to stay Within the partnership.”
David Clark: VenCap's China allocation dropped by half over ten years
“It's come down by half over the last 10 years.”
Clark: VenCap sells distributed public stock immediately rather than holding
“We tend to sell because we don't think it's our job to hold public stock for our investors. They have their equity managers who do that and would do a better job than we would.”
VenCap targets three-year deployment cycles across all its funds
“Time diversification in a fund is so important. And so we look to invest all of our funds across a three year period.”
David Clark: Early-Stage VC Funds Must Offer 1x Fund Return Potential
“We still feel comfortable that they're, whatever the fund size they're investing out of, that there's a, an opportunity for them to return the fund from within it, with a single investment. It, it's slightly, certainly for early stage funds. I think for later …”
David Clark: VenCap has only 10% of its portfolio invested in Europe
“And when I look at our portfolio there's a reason only 10% of our portfolio is invested in Europe.”
VenCap Disregards VCs Who Passive-Rode Small Seed Checks to Large Returns
“So if you wrote a 50,000 dollar seed check and Turned up 15 years later and found you had a company that, you know, went public at a ten billion dollar valuation, then that's less interesting for us. If you were leading around, if you were on the board, if you…”
Clark: LPs do not need every top fund to succeed
“One of the things that, one of the things that we've learned is that you don't have to do every great manager out there. You just have to make sure all the managers you do are great.”
VenCap accepts higher VC fees if net performance stays top-quartile
“For us, it's about net performance. So, you know, what does that performance look like after the fees and carry have been taken off? And if it's consistently top quartile and it's consistently strong then we're relaxed about that.”
VenCap targets a 50-50 capital allocation between early and growth funds
“We want to be sort of roughly fifty-fifty between early and growth. It's a challenge to manage that if we end up being sort of, 45, 55, I think we're comfortable with that. We don't want to be 30, 70.”
Clark: Historically, 60% of early-stage venture investments return under 1x capital
“Historically for an early stage fund that's been 60% of companies don't return one X cost.”
Clark: Reference VC managers with non-co-investing sector peers
“So I think that's probably the biggest thing that's come out of our decision review process is to be, is not just to reference people who we know work with each other, but reference people who are in that particular sector, who we would normally expect to have…”
VenCap maintained a nearly three-year deployment pace for its 2019–2021 fund
“When I look at the fund that was deploying 1920, 21, we did that in a quarter under three years. So even though our managers were coming back, some of them in 18 months, we still maintain that time diversity in our portfolio.”
VenCap’s worst-performing fund was a 1999 vintage deployed in 15 months
“One of the mistakes we made in the late nineties was deploying our funds too quickly in, I think we had one fund that was fully invested in 15 months. And it was the worst fund we had. So it was in, you know, the 1999 vintage fund.”