RTC #36: Venture capital fund performance revealed

Hi everyone, here is today’s issue at a glance:

Forwarded this email? Join 1000s of founders and early-stage investors and sign up now.

📢 My favorite links of the week

👉 Raising from VCs in the US? This info is important for you. (Link) - My favorite this week

👉 Global league tables Q/2024: Most active PEs and VCs, investment banks, and M&A advisory firms across the US/Europe and globally (Link)

👉 Where did all the unicorns go? (Link)

👉 A pretty good week in SaaS: Shopify, Datadog, Palantir…you name it (Link)

👉 Raising a pre-seed round? Here’s what investors want to see (Link)

👉 What documents do investors want to see? Best practice on data room (Link)

👉 Next time you pitch a VC associate who sh*ts on your startup, send them this 😂 (Link)

📖 Report of the week

VC Fund Performance: Q1 2024

“This is an absolute must-read on venture capital trends and performance”

Carta just published their first-ever VC Fund Performance report, with data up through Q1 2024.

Funds included must have been in vintage years 2017 through 2022. Each vintage year includes at least 120 underlying funds.

This is a great insight into how VC funds are currently performing and what years are struggling.

Basic definitions to help understand the Carta VC Fund Performance Report

Who/What is Carta?

➡️ Leading tech company that specializes in capitalization table management and valuation software and has three main products and services:

• Cap Table Management: Carta helps companies maintain and manage their capitalization tables, tracking ownership percentages, equity dilution, and value through each investment round.

• Digital Share Issuance: The software enables founders to issue digital share certificates and manage stock options, valuations, and equity plans.

• Portfolio Management: Venture firms use Carta to oversee their investment portfolios and track stock ownership and transactions in a centralized dashboard.

What is “Vintage Year”?

➡️ Vintage year in the private equity and venture capital industries refers to the year in which a fund began making investments.

What does “IRR” stand for?

➡️ Internal rate of return (IRR) is one of the most commonly used metrics for fund performance.
➡️ At a basic level, it’s a way to measure the return that a fund has produced (or is expected to produce)for its investors while accounting for the time value of cash flows.
➡️ This allows funds of different vintage years to be compared against one another.

What does “TVPI” stand for?

➡️ TVPI (Total Value to Paid-In Capital).
➡️ It’s calculated by dividing the total current value of a fund’s assets and distributions by the amount invested to date.
➡️ Includes unrealized gains from active portfolio companies, with changes in TVPI over time reflecting shifts in asset value and potential final returns.

So, what did the VC Fund Performance report tell us?

Here are my three highlights...

➡️ Over 50% of the 2021 VC funds and almost 75% of the 2022 VC funds show IRRs below 0.

➡️ Q1 2024 had the highest share of down rounds in the last 5 years.

➡️ If in doubt, it is probably a “bridge round”.

Not enough?

Get the full Carta VC Fund performance report here

Want even more?

Global fund performance report (with preliminary Q1 2024 data) (Pitchbook)

Q1’24 Venture Pulse Report – Global Trends (KPMG)

How VCs made decisions in 2021 and 2022 (?)

All clear now… 😂

📅 Calendar of main VC events in the upcoming weeks

“Networking is a lot like nutrition and fitness: we know what to do, the hard part is making it a top priority”

September
• TechBBQ | Copenaghen, Denmark | Sep 11-12
• Carbon Unbound Europe | London, UK | Sep 11-23
• France Digitale Day | Paris, France | Sep 18
• B2B Rocks | Paris, France | Sep 25-26
• TechChill Milano | Milan, Italy | Sep 25-27
• Italian Tech Week | Turin, Italy | Sep 25-27
• The Drop | Malmo, Sweden | Sep
• Bits & Pretzels | Munich, Germany | Sep 29 - Oct 1

October
• Sifted Summit | London, UK | Oct 2-3
• World Summit AI | Amsterdam, The Netherlands | Oct 9-10
• SaaStock | Dublin, Irland | Oct 14-16
• The Business Booster | Barcelona, Spain | Oct 16-17
• TechCrunch Disrupt | San Francisco, US | Oct 28-30
• 0100 Conference Mediterranean | Milan, Italy | Oct 28-30

👉 Get the full list of events in 2024 here

Thank you for reading today’s issue. If you enjoyed it, leave a like or comment, and share it with your friends. Follow me on LinkedIn to never miss updates again.

Have a great week,
Stephan 👋

Issue #36 | 20 August