Origins - Inside Venture Capital, Hosted by a GP and an LP Minisode: Franchise Funds: Is Venture Broken?
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Mar 25, 2025 A deep dive into whether the venture capital landscape is faltering, especially with the sluggish exit market projected for 2025. The discussion highlights the critical need for adaptation among all partners amidst liquidity challenges and evolving market dynamics. Emerging managers may gain an edge through strong founder connections, despite the difficulties of building trust with cautious investors. The hosts emphasize the importance of staying current and creatively navigating the complexities of venture capital.
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Venture is Broken?
- The exit was always the presumed goal, but going public is now unattractive to CEOs.
- The secondary market isn't as deep as the public market, making large exits challenging.
Venture's Structural Dependence on Exits
- The venture industry's structure, including carry and options, relies on exits.
- Lack of exits might necessitate changes in how venture capital operates.
The Importance of Large Multiples
- While 1x returns are important, larger multiples (5-10x) are needed to offset losses.
- Big multiples often require public exits, making them crucial for venture success.