The VC firms sitting on the biggest paper gains

May 4, 2016

In an article by Brad Feld reflecting on Bill Gurley’s On the Road to Recap post, Feld includes a great philosophy/warning—“it’s not money until you can buy beer with it.” So using our fund returns data, we took a quick look at the venture funds currently sitting on the largest paper gains.

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If you need a refresher on any of these fund terms, check out our PE/VC glossary page. Also note that due to GP and LP reporting lags, these numbers are from 2H 2015 and not the past quarter.

The current amount of capital that is mentally ‘booked’ but not actually deposited is significant. There are several funds here that have very impressive returns (SoftTech VC III, Lightspeed Venture Partners IX, General Catalyst Group VI) but are sitting completely on paper gains. As Gurley points out, this creates a lot of different incentives. Attention, LPs, GPs and founders: you should be aware and likely talking a lot more about realized rather than unrealized gains.

It’s impossible to show this list and not call out some impressive returns by a couple VCs in particular. Here’s a quick look at two of the more remarkable funds.

Foundry Venture Capital 2007

Foundry’s 2007 fund has a notable 52.47% IRR and has already returned 2.4x (DPI) to its LPs, with paper gains totaling an additional 4.4x (RVPI). The investment that drove the big distribution in early 2012 was Zynga. The fund also saw a good amount of exits in 2015, returning $222 million to LPs that year.

Image: Screenshot of the PitchBook Platform

 

FirstMark Capital 1

The early-stage venture firm headed up by Amish Jani, Richard Heitzmann and Matt Turck had an incredibly successful first fund. Putting up a top quartile fund that has already made LPs whole, it is sitting on a significant amount of paper gains that has helped raise five subsequent funds. FirstMark Capital’s first fund made a number of strategic investments, including Riot Games, Shopify and IMImobile.

Image: Screenshot of the PitchBook Platform

 

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