IRR-ational Returns?
summary
Panel argues that IRR misleads until a fund liquidiates and prefers TVPI over IRR for apples‑to‑apples comparisons, using DPI to measure cash returned; target metrics are ~20% IRR minimum for VCs, 2–2.5x TVPI typical floor and 3–5x fund returns aimed for. Metrics update only on equity raises so valuations are realized valuations only. Fund lifecycles run ~10 years, family offices hold 10–20 years, one fund reports four unicorns from ~70 companies while a family office lists ~35–40 investments and 5–6 exits.
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chapters (22)
- 0:00Introduction and panel setup
- 1:59Speaker introductions
- 3:01What is IRR explained
- 4:04VC fund metrics TVPI and IRR
- 6:09Family office perspective on metrics
- 7:35VC fund communication on IRR
- 9:44TVPI vs IRR importance
- 11:50IRR limitations and uncertainties
- 12:35Investor return expectations
- 13:38Startup metric distortions
- 15:02Power law and unicorn investments
- 16:05Investment cycle differences
- 17:32Secondary markets and exits
- 18:55Startup performance metrics
- 20:23Investment criteria flexibility
- 22:54Starting a fund or family office
- 24:18Deal flow and early investments
- 25:40Family office alternatives
- 26:45Exits unicorns and portfolio impact
- 28:11Long term investment horizons
- 29:37IRR vs TVPI final consensus
- 29:58Audience Q&A and closing
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