tag:blogger.com,1999:blog-12858245.post112663533598820839..comments2024-01-09T21:59:59.860-08:00Comments on Will Price: Early Stage Haven?Anonymoushttp://www.blogger.com/profile/07526077009135142958noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-12858245.post-1126653170378772702005-09-13T16:12:00.000-07:002005-09-13T16:12:00.000-07:00Will - certainly lots to think about...As an early...Will - certainly lots to think about...<BR/><BR/>As an early-stage; software-only investor in the UK and Ireland - we do get to see lots of interesting stuff... and the specialist focus and our network makes it possible on a small budget ($50M fund...)<BR/>Jeff then makes a valid point about scale... Though Mangrove through Skype should probably N times return their fund... very much an outlier on all the european VC stats of 2000/2001 early stage funds...<BR/>Indeed, whilst already too much has been blogged about Skype, I think it is most phenomenal aspect of the result Niklas et al brought in is the capital efficiency with which they did it...<BR/><BR/>Our fund is doing well - though next one we would prefer to be closer to the $150M (at current exchange rates...) and be less worried about losing the "value created" with limited "pay to play" resources to direct to our companies... (in my view the riskiest part of this early stage business...;)<BR/> <BR/>Keep the brain fodder coming... Sandy McKinnon - Pentech VenturesAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-12858245.post-1126641728305210082005-09-13T13:02:00.000-07:002005-09-13T13:02:00.000-07:00Couple of points:- Alongside the amount invested, ...Couple of points:<BR/>- Alongside the amount invested, the number of deals has to be taken into account. As I and others have written, it does not take much capital to get a "Web 2.0" service up and running, and some of these startups will break even on just a few million dollar invested. This might lower the total amount of capital invested early stage.<BR/>- There might be great IRRs to be had on early stage deals, but the issue is how much does a given deal contribute to the overall performance of a fund. i.e does a 10X return on a $1M investment count (for example). Well it does if you have a $100M, but not really if you have a $500M.<BR/><BR/>As you suggest, smaller funds might be better off on that front, because they can benefit from smaller deals. But the economics can become challenging because the management fee can only pay for so many investment professionals, who can work on only so many deals. And an early stage deal requires a lot of work, if you really want to support the company and its management team.<BR/><BR/>The right balance ? $150 to $200M ?Anonymousnoreply@blogger.com