AngeBlog by Basil Peters

VC Fund Lifetimes

My previous post was about how it takes about a decade longer to exit in companies with venture capital investors.

That's much longer than most entrepreneurs and angel investors would guess.

Most VC funds are designed for ten year lifetimes. In actual practice, it takes significantly longer to actually exit the investments and shut down the typical IT VC fund.

The actual distribution of VC fund lifetimes is show in the graphic below.

VC Fund Lifetimes

VC funds get most of their money from either financial institutions or individual investors. Institutions are extremely patient investors. They are usually managers of pension or life insurance funds. They often hold their capital for decades.

The data in this graph makes it much easier to appreciate how much longer the time horizons are for the typical VC fund compared to the average entrepreneur or angel investor.

Keep in mind that VCs usually invest a few years after startup and a couple of years after the angels.

This investment horizon disparity is one of the reasons entrepreneurs scare off so many angel investors when they give a presentation that says they are planning to follow their angel round with a VC round in a couple of years.

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