Good morning 👋
And Happy Friday - what a week. In case you missed it, here’s what we covered earlier this week:
AngelList is coming after the entire VC tech stack
Venture debt is having a moment
Where proptech money is being put to work
Today we’re talking about fund life cycles and why the 10-year fund may need some adjustments.
P.S. 💰 Are you a full-time investor AND do you want to get paid more?
Today’s highlights
Extended exits are forcing funds to rethink the fund life cycle
The state of secondaries markets
A deep dive on Thrive Capital
Why the best information is the hardest to find
TOP
10-years for liquidity?
Venture capital funds have long operated on a 10-year lifecycle. But as private companies delay exits, these timelines are under pressure.
Unicorns are staying private for nearly a decade on average, and ~40% are taking even longer.
As this has played out, fund managers have been forced to deal with liquidity risks, extended returns, and impatient LPs.
Why it matters: Changing this assumption has a few ripple effects:
The traditional 10-year VC fund model isn’t keeping up with market realities. More companies are opting to stay private longer, pushing returns out of sync with investor expectations. Nearly 40% of U.S. unicorns have lingered in VC portfolios for 9+ years, making the "10-year cash-out" goal increasingly elusive.
For LPs, this lag means stuck capital, delayed returns, and tough decisions: hold onto stakes in aging funds or sell at a discount in the secondary market? In the last two years, secondaries discounts have hovered around 15%, a less-than-ideal trade-off.
Meanwhile, IRRs (internal rates of return) are taking a hit. A fund delivering a 4x multiple after 15 years instead of 10 drops its IRR below 10%—a hard sell when lower-risk assets are offering competitive returns.
The trendline: The VC ecosystem is increasingly reliant on alternative liquidity options like continuation funds and secondaries. Firms like Lightspeed and NEA are already rolling older holdings into these vehicles, giving LPs a "cash now or wait longer" choice.
What happens next: Expect more creative fund structures to emerge as GPs navigate this liquidity crunch.
LPs, once content with the 10-year cycle, may begin demanding shorter commitments or pushing for stricter exit timelines. As for funds themselves, the pressure to deliver actual distributions over paper returns is reshaping strategies across the board.
Together with Hiive
AI + Crypto = HUGE transformation of secondaries market 👁🗨
The secondaries market is on fire right now. We know this because we read Hiive’s latest private market report.
These reports offer a window into pricing, liquidity, and momentum trends in the pre-IPO market, and they use real-time data derived from user indications and transactions on Hiive’s platform.
We’ve looked, and we haven’t found better secondaries information and commentary anywhere else.
LINKS
🧐 Contrasting Elon Musk, Peter Thiel and Sam Altman: Erik Torenberg discusses the differences of the three
🟨 The Yellow Pages Problem of Private Markets: Data-Driven VC shares that we’ve built increasingly sophisticated databases that tell us everything about a company except what it actually does
📖 Your Guide to the 2024 SaaS Benchmarks: Growth Unhinged releases their 8th annual benchmark report based on data from over 4,000 companies in aggregate and 800+ from this year’s survey
🤔 What Do Venture Capitalists Do?: Mario Gabriele, found the The Generalist, cites a study from 1984 that outlines the habits of Silicon Valley’s capital class and asks how they have changed
🤖 How are Non-AI Companies Leveraging Artificial Intelligence in the Age of LLMs?: Contrary Research posts their exploration
TWEET
HEADLINES
Most Venture Investors Want Their Startups to Go Public. Not This One. (WSJ)
Thrive Capital: the venture firm staking billions on a few big bets (FT)
Why More Companies Will Hire Creators in 2025 (The Information)
Accel-backed Cyera raises another $300M, more than doubling its valuation (Pitchbook)
Lightning looks to make managing AI a piece of cake (TechCrunch)
MEME
Thanks for reading this far and giving us a little bit of your attention this week.
Feel free to unsubscribe whenever this stops becoming valuable to you.
- Clay
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