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0 pointsnikcub13y ago0 comments

that makes the IRR a crazy 1.33x10^3175% [1]

funny that they would only need to let their investment ride into equivalent investments for another 21 days before reaching a return of 209 Trillion dollars, which is in excess of the total value of all stocks, bonds and currency in the world.

[1] http://www.wolframalpha.com/input/?i=%3D+%281+billion+-+500+...

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URSpider9413y ago

Odd as it may seem, this is not necessarily great for the VC's. Most VC funds only get to invest each dollar once; when it gets cashed out after an IPO or M&A event, the returns go back to the investors. I'm not sure if this money still counts as being under management for purposes of their 2% annual commission; if not, then it's almost certainly a bad deal.

pge13y ago

Many funds have provisions for recycling (ie calling a given dollar twice instead of just once) that address cases like this that are quick flips.

One other note - for the first five years of a fund (typically), the 2 percent fee is calculated on committed capital not invested capital, so an event like this has no impact.

smackfu13y ago

I don't think they can sell the Facebook shares yet, so I don't know if that calculation is correct.

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