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The New Reality of the 14-Year Venture Capital Fund


The New Reality of the 14 Year Venture Capital Fund Institutional Investor

Source: http://m.institutionalinvestor.com/Artic...

Venture capitalists structure and market their funds based on a ten-year fund life. In actuality, only about 7 percent of funds liquidate within a decade, and recent data on fund duration indicate that the median fund takes slightly longer than 14 years to end.

The problem for limited partners is that we bear the costs of longer than expected VC fund lives — the stranded capital, greater illiquidity and additional management fees — but are seldom compensated for doing so.

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This makes me wonder why venture funds have 10 year lifespans instead of 15 or 20 years.

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