It is a simple equation. The longer you hold onto an investment, the lower the returns inspite of growth in valuation. Most VCs are not aligned with LPs since they focus on MOIC (cash on cash returns) rather than IRR. In turn, they sacrifice higher returns for carry, making VC unsustainable in the long term. Only secondaries allows investors to lock in returns early, return cash that can be reinvested, and drive higher returns. See graph below. In MENA alone, over $5B has been invested in the past 3 years, yet only a few hundred million dollars have been returned. (That said, congratulations to BECO Capital on its recent exit from Property Finder with a fund returner!) #math #secondaries #returns #cashisking #vc #venturecapital
It's also good for the ecosystem! There's only a fixed amount of capital dedicated to the space - the more it moves, the more value it creates. Econ 101 - Velocity of Money :)
Managing Partner | Looking for builders to join our movement
6 个月How do we know it’s a fund returner Basil?