The Ledger
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Clarkson: Multi-billion-dollar VC funds disconnect GP fees from actual returns
“If you have a fund that's, I don't know, many billions, you're going to have a number of GPs that are making significant dollars, assuming it's spent Not spent on platform and other things. But if you can make that kind of money without even returning the fund…”
Clarkson: Growth equity mindset in early-stage funds fails long-term
“It's so clear in early stage, if you're not taking a big swing for the fence, which doesn't mean saying taking like ridiculous, I haven't thought about it risks, right? But you just have a lot of people that think that they can do sort of smaller investments, …”
Clarkson: Strict GP commit requirements create unnecessary barriers for new managers
“To your point about GP commit, yes, it has been an unnecessary barrier to entry for too many GPs.”
Clarkson: LPs are not in the same risk-taking business as GPs
“Sometimes other folks forget that LPs are not in the same business of risk taking the way that GPs are.”
Clarkson: LPs must commit consistently because venture markets cannot be timed
“There is a very long history of looking at venture returns, which says if you're not in the market, you just don't know how to call the exit, so you have to be consistent about committing.”
Clarkson: Institutional LPs re-up for Fund II because data requires Fund III
“So I think those institutional fund ones from day one will have a much easier time raising fund two, because most LPs have been in the venture business for a while, know that there is only so much you can show in two to three years of work. So barring somethin…”
Clarkson: Multi-billion-dollar funds exist because large LPs prioritize capital preservation
“There is a class of LPs that need to write very large checks. Those are vehicles that work for that fund size. We also have to understand, I mean, I know you get this, but it's, I think sometimes other folks forget that LPs are not in the same business of risk…”
Clarkson: Some LPs invest in funds primarily for direct co-investment checks
“Somebody who, when you call them and you say, why'd you invest in this fund, and they say, oh, I'm only here for the direct deals, I don't care about the return as much. It's not that it doesn't matter, it's just, they're not doing it for the fund return, they…”
Clarkson: Emerging VC managers rarely achieve persistent flywheel in fund one
“It's just very hard to do in your first fund cycle because there's just not enough time.”
Clarkson: Seed Managers Lose Direct Boardroom Access by Series B or C
“That disputes my theory, because a lot of times seed managers don't, they only might have information rights by the time a series B or C comes up, so they might not have all the information that someone in the boardroom has.”
Clarkson: VC managers cannot generate 3x fund returns through company soft landings
“I'm having more conversations with more managers who are like, hey, we're just going to try to find some soft landing for these companies. It's just not going to work, which we've been expecting for years to my point about loss ratio. So that doesn't wildly su…”
Beezer Clarkson: Delivering three or four consecutive strong DPI funds is world class
“I think the numbers will tell you if you ask different LPs, if you can get three or four funds in a row with strong DPI, that is world class.”
Clarkson: VC funds should maintain at least a three-year investment horizon
“We're advocates of a three-year, at least, investing term for a couple of reasons. One is time differentiation in your portfolio. If, say, for example, the 18 months you were investing was 14 and 15, you would have had a lot of big, heady valuations going on, …”
Venture Funds Exceeding $700M Lose Their Predominant Series A Focus
“One, since we're focusing on funds that are predominantly Series A exposure, many funds, when they get into the seven hundred billion dollar fund size, are not predominantly Series A. They're doing other stages.”
Clarkson: Institutional LPs are "like snowflakes" with unique investment criteria
“LPs are like snowflakes, and everyone's a bit different”
Clarkson: Top LPs and VCs invest consistently rather than timing markets
“One is a commitment to the asset class over time, that timing of the market doesn't seem to be something anybody suggests. And instead it's the, you have to invest consistently over time year after year after year. So the great LPs and the great VCs do the sam…”