General VC Questions
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Ask anything about venture capital, and there will likely be an answer. Sometime there is no answer, and you may need to consult a professional. The training data is growing every day, which will help the system answer even more questions in the future.
Hi again @Woody Butler ,
I tried to sent another batch of but I received an error since yesterday assuming that I exceeded to 500 emails per day but as I tried to sent today, it wont go through. and I have this error below:
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I noticed some of tags in the entries are missing. Is there a way to restore it?
As I checked the entry list. some of the tags I made disappeared in the funnel. Is there a way to restore it?
See the image below for references
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Can I warehouse an investment for start fund?
Can I warehouse an investment for start fund? If it is a past deal I have made, can I bring it into my start fund.
What Happens to Capital Call Money Before It’s Invested?
How is the money collected from a capital call treated before it is invested into startups? Does it accrue interest in a bank? What restrictions are imposed on that money - eg. can it be invested in crypto while the fund identifies the right startup to invest in?
What all is included in the expenses portion of the income statement?
Could you please share the components of the expense report:
• What all is included in the expenses portion of the income statement? Is management fees and carry considered an expense, or a distribution?
Q2. What is the process to enter information for the capital call (e.g. the amount and then the percentage?)
I was not able to proceed as the amount to be called could not be updated.
Are recycled provisions generally only used for new investments? Or also for follow-on investments?
The exact allocation depends on the Limited Partnership Agreement (LPA) of course, but is there one of the two options that occurs most often?
Is a 25% fund recycling target rate realistic?
Is a 25% fund recycling target rate realistic? Seems too optimistic even for a USD 25m fund.
According to Perplexity. Ai
A 25% fund recycling target rate is generally considered ambitious but potentially achievable for a venture capital fund, including a $25 million fund. However, it's important to note that this target may be optimistic and challenging to reach consistently[5][8].
Recycling in venture capital refers to reinvesting proceeds from early exits back into the fund instead of distributing them to limited partners (LPs). This practice can help offset management fees and potentially boost overall returns[5][8].
For a $25 million fund:
1. A 25% recycling rate would mean reinvesting about $6.25 million.
2. This level of recycling requires multiple successful early exits.
3. The timing of these exits is crucial, as they need to occur early enough in the fund's life to allow for reinvestment[8].
Challenges in achieving a 25% recycling rate:
1. Seed-stage investments typically take 7-10 years or more to exit[8].
2. Finding suitable reinvestment opportunities that maintain high return potential.
3. Balancing recycling with the need to provide returns to LPs.
While some funds have achieved recycling rates of 20% or higher, it's not common across the industry. A more typical recycling rate might be in the 10-20% range, depending on the fund's strategy and success[5].
In conclusion, while a 25% recycling target is potentially achievable, it may indeed be optimistic for most funds, including a $25 million fund. Fund managers should carefully consider their strategy and market conditions when setting recycling targets[5][8].
Sources
[1] Finding the Right Targets for Recycling Rates Remains an Elusive ... https://www.waste360.com/waste-recycling/finding-the-right-targets-for-recycling-rates-remains-an-elusive-goal
[2] Fund Recycling Moves the Needle for Both LPs and GPs. Here's How https://sapphireventures.com/blog/fund-recycling-moves-the-needle-for-both-lps-and-gps-heres-how/
[3] Is a 25% annual return realistic? : r/investing - Reddit https://www.reddit.com/r/investing/comments/1be2f4p/is_a_25_annual_return_realistic/
[4] Lawmakers greenlight statewide recycling program funded by ... https://www.denver7.com/news/environment/lawmakers-green-light-statewide-recycling-program-funded-by-packaging-producers
[5] Venture Capital Fund Recycling | AngelList Education Center https://www.angellist.com/learn/recycling
[6] [PDF] Resource Recovery Implementation Program - City of Houston https://www.houstontx.gov/solidwaste/RRIC/RRIC-Final-Report-Phase-1.pdf
[7] How To Set Recycling Targets That Actually Work - LinkedIn https://www.linkedin.com/pulse/how-set-recycling-targets-actually-work-tomra-jkzff
[8] Recycling: The challenge and the opportunity for a Seed stage VC https://informationarbitrage.com/post/151395558860/recycling-the-challenge-and-the-opportunity-for-a
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