Origins - Inside Venture Capital, Hosted by a GP and an LP Revisiting Power Law VC Performance with David Clark
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Feb 20, 2025 In a deep dive with David Clark, an Investment Director at VenCap International plc, listeners gain insights from his nearly 40 years in global venture capital. He uncovers that 50% of VC investments fail to return capital, sparking a vital discussion on how LPs can identify top-performing managers. David emphasizes the significance of a data-driven approach, revealing findings from 30 years of data which can reshape LP strategies. The talk also highlights the importance of mentorship and building lasting relationships in the complex VC landscape.
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Power Law in Venture Returns
- Over 50% of VC investments don't return capital, a consistent trend over 30 years.
- A small number of companies (25-30 annually) generate over half of the VC industry's total exit value.
Established Managers vs. Emerging Managers
- VenCap primarily invests in established managers (Fund 3 or later) and large funds (over $100M).
- This contradicts the narrative that smaller funds and emerging managers outperform.
Predictability of Returns
- While smaller funds might offer higher returns, predicting their success is challenging.
- Established managers offer more predictable, consistent returns (3.5-4x) over long periods.