Venture Capital's Delicate Balance: DPI and TVPI

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In venture capital, achieving a high distribution to paid-in (DPI) ratio is crucial to providing actual cash returns to limited partners (LPs). Even if the majority of investments lose value, a singular successful investment can still yield positive results. Selling a portion of a successful investment raises DPI while leaving total value to paid-in (TVPI) intact. However, recent market conditions have limited the avenues for early DPI, as initial public offerings (IPOs) are scarce, founders are opting to maintain private ownership longer, and mergers and acquisitions (M&A) opportunities have diminished. Instead, secondary sales of shares and unique acquisitions are becoming common, impacting the traditional dynamics of cash distributions.

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Todays show:

Alex Wilhelm joins Jason to discuss venture capital fund performance (15:02), potential big tech breakups (41:14), SF Standard piece analysis on Ben and Felicia Horowitz (47:04), startup shutdowns (1:11:28), and more!

Timestamps:

(0:00) Jason and Alex kick off the show

(5:31) Discussion on productivity and browsers with ChatGPT-4

(10:21) Coda - Empower your startup with Coda’s Team plan for free—get 6 months at https://www.Coda.io/twist

(11:54) Debate on regulations in the U.S.

(15:02) Deep dive into venture capital fund performance, IRR, and DPI

(25:37) Strategy of David Clark's fund of funds

(27:16) Realities of investing in venture capital

(30:02) Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist

(30:53) Venture capital performance impact on LPs and future fundraising

(34:23) Consequences for new and small venture firms

(39:24) Fundrise - Sign up today at https://fundrise.com/TWIST