All-In with Chamath, Jason, Sacks & Friedberg E78: VC fund metrics that matter, private market update, recession, student loans, Bill Hwang arrest
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Apr 30, 2022 The hosts dive into the critical metrics of venture capital, shedding light on how funds manage their reported returns. They discuss looming recession risks and their impact on the tech sector, highlighting recent GDP declines and inflation challenges. The conversation turns to the complexities of student debt in the U.S., with innovative solutions like cooperative education programs gaining attention. Finally, they explore legal troubles faced by high-profile investors and the contentious balance between free speech and misinformation in today's social media landscape.
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Transparent Fund Metrics
- Show all key fund metrics, including gross and net IRR, TVPI, and DPI, to ensure transparency.
- This helps LPs assess fund performance accurately and avoid misleading information.
Focus on DPI
- Distributions to paid-in capital (DPI) is the most critical metric for evaluating fund performance over the long term.
- Other metrics like IRR and TVPI are approximations until actual distributions occur.
Illiquidity and Risk Premium
- Demand a premium for illiquidity and high failure rates when investing in private funds compared to the S&P 500.
- Add 7-8% for illiquidity and another 7-8% for the business model's viability to the S&P's 7-8% return.
