46 min
E9: David Clark, Investment Director at VenCap | What Every LP Gets Wrong About Power Laws, Adverse Selection in VC, and What % of Startups Go to Zero? The 10X Capital Podcast: The Limited Partner with David Weisburd and Erik Torenberg | Startups, Venture Capital, and Limited
-
- Business
David Weisburd sits down with David Clark, Investment Director at VenCap International PLC to discuss his viral post about power laws in venture capital, manager predictability, adverse selection in VC, and what percent of startups go to zero. If you’re ready to level-up your startup or fund with AngelList, visit www.angellist.com/tlp to get started.
The LImited Partner podcast is part of Turpentine media network. To learn more: https://www.turpentine.co/
RECOMMENDED PODCAST:
Founding a business is just the tip of the iceberg; the real complexity comes with scaling it. On 1 to 1000, hosts Jack Altman and Erik Torenberg dig deep into the inevitable twists and turns operators encounter along the journey of turning an idea into a business. Hear all about the tactical challenges of scaling from the people that built up the world’s leading companies like Stripe, Ramp, and Lattice. Our first episode with Eric Glyman of Ramp is out now: https://link.chtbl.com/1to1000
RECOMMENDED PODCAST:
Every week investor and writer of the popular newsletter The Diff, Byrne Hobart, and co-host Erik Torenberg discuss today’s major inflection points in technology, business, and markets – and help listeners build a diversified portfolio of trends and ideas for the future. Subscribe to “The Riff” with Byrne Hobart and Erik Torenberg: https://link.chtbl.com/theriff
TIMESTAMPS:
(00:00) Episode Preview
(02:40) David Clark's data set of over 250 early-stage funds
(04:40) Power laws and fund returns
(09:20) Survivorship data and challenges in emerging managers data
(12:30) Succession in VC
(14:36) Sponsor: AngelList
(18:43) How do you back the top 1% of companies
(21:30) Ownership percentages and returns
(29:00) Follow on that a fund should reserve at every stage
(36:30) Ten year predictions for VCs and LPs
X / Twitter:
@Daveclark85
@dweisburd (David)
@eriktorenberg (Erik)
LINKS:
https://www.vencap.com/
Tim Jenkinson paper on persistence of returns in VC – the table is on page 31 that shows the 45% of managers whose last fund was top quartile went on to have a top quartile successor fund. Page 42 shows the quartile ranking of first time funds mentioned – slightly more in the first and fourth quartiles, but overall pretty evenly distributed. -> https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2304808
This is the link to the article that suggests initial success is quite random, but VCs that have an early success can leverage this to a strong effect.https://www.hbs.edu/ris/Publication%20Files/17-065_599caed6-9c77-4dca-9f71-92e580b7834e.pdf
Here is the link to the Cambridge Associates paper that shows emerging managers occupy a high proportion of the best funds in any vintage, plus their subsequent paper that also mentions emerging managers comprise a high proportion of the worst managers (page 6 of the pdf)
https://www.cambridgeassociates.com/en-eu/insight/venture-capital-positively-disrupts-intergenerational-investing/
https://www.cambridgeassociates.com/en-eu/insight/building-winning-portfolios-through-private-investments/
SPONSOR: AngelList
The Limited Partner Podcast is proudly sponsored by AngelList. If you’re in private markets, you’ll love AngelList’s new suite of software products.
-For private companies, thousands of startups from $4M to $4B in valuation have switched to AngelList for cap table management. It’s a modern, intelligent, equity management platform that offers equity issuance, employee stock plan management, 409A valuations, and more.
If you’re a founder or investor, you’ll know AngelList builds software that powers the startup economy. If you’re ready to level-up your startup or fund with AngelList, visit www.angellist.com/tlp to get started.
--
Questions or topics you want us to discuss on The Limited Partner podcast? Email us at LPShow@turpentine.co
David Weisburd sits down with David Clark, Investment Director at VenCap International PLC to discuss his viral post about power laws in venture capital, manager predictability, adverse selection in VC, and what percent of startups go to zero. If you’re ready to level-up your startup or fund with AngelList, visit www.angellist.com/tlp to get started.
The LImited Partner podcast is part of Turpentine media network. To learn more: https://www.turpentine.co/
RECOMMENDED PODCAST:
Founding a business is just the tip of the iceberg; the real complexity comes with scaling it. On 1 to 1000, hosts Jack Altman and Erik Torenberg dig deep into the inevitable twists and turns operators encounter along the journey of turning an idea into a business. Hear all about the tactical challenges of scaling from the people that built up the world’s leading companies like Stripe, Ramp, and Lattice. Our first episode with Eric Glyman of Ramp is out now: https://link.chtbl.com/1to1000
RECOMMENDED PODCAST:
Every week investor and writer of the popular newsletter The Diff, Byrne Hobart, and co-host Erik Torenberg discuss today’s major inflection points in technology, business, and markets – and help listeners build a diversified portfolio of trends and ideas for the future. Subscribe to “The Riff” with Byrne Hobart and Erik Torenberg: https://link.chtbl.com/theriff
TIMESTAMPS:
(00:00) Episode Preview
(02:40) David Clark's data set of over 250 early-stage funds
(04:40) Power laws and fund returns
(09:20) Survivorship data and challenges in emerging managers data
(12:30) Succession in VC
(14:36) Sponsor: AngelList
(18:43) How do you back the top 1% of companies
(21:30) Ownership percentages and returns
(29:00) Follow on that a fund should reserve at every stage
(36:30) Ten year predictions for VCs and LPs
X / Twitter:
@Daveclark85
@dweisburd (David)
@eriktorenberg (Erik)
LINKS:
https://www.vencap.com/
Tim Jenkinson paper on persistence of returns in VC – the table is on page 31 that shows the 45% of managers whose last fund was top quartile went on to have a top quartile successor fund. Page 42 shows the quartile ranking of first time funds mentioned – slightly more in the first and fourth quartiles, but overall pretty evenly distributed. -> https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2304808
This is the link to the article that suggests initial success is quite random, but VCs that have an early success can leverage this to a strong effect.https://www.hbs.edu/ris/Publication%20Files/17-065_599caed6-9c77-4dca-9f71-92e580b7834e.pdf
Here is the link to the Cambridge Associates paper that shows emerging managers occupy a high proportion of the best funds in any vintage, plus their subsequent paper that also mentions emerging managers comprise a high proportion of the worst managers (page 6 of the pdf)
https://www.cambridgeassociates.com/en-eu/insight/venture-capital-positively-disrupts-intergenerational-investing/
https://www.cambridgeassociates.com/en-eu/insight/building-winning-portfolios-through-private-investments/
SPONSOR: AngelList
The Limited Partner Podcast is proudly sponsored by AngelList. If you’re in private markets, you’ll love AngelList’s new suite of software products.
-For private companies, thousands of startups from $4M to $4B in valuation have switched to AngelList for cap table management. It’s a modern, intelligent, equity management platform that offers equity issuance, employee stock plan management, 409A valuations, and more.
If you’re a founder or investor, you’ll know AngelList builds software that powers the startup economy. If you’re ready to level-up your startup or fund with AngelList, visit www.angellist.com/tlp to get started.
--
Questions or topics you want us to discuss on The Limited Partner podcast? Email us at LPShow@turpentine.co
46 min