Is a long-duration, modest-multiple exit a good use of venture capital?

Harry Stebbings · May 8, 2024

Late-stage entries like Stripe at $32B are poor uses of venture capital because a $100B outcome in seven to ten years is only a 3x and the opportunity cost of that cash is very real

With no further dilution it's a 3x at best, and comparable or better returns were available elsewhere, including roughly 2.5x on the S&P

Scope: assumes no further dilution

56:49 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Larry Aschebrook · Jun 16, 2025

Even when a manager would love a ten-year horizon on great companies, they should stick to the DPI mandate their LPs hired them for

LPs have hired them specifically for the DPI North Star that has been pitched consistently for fifteen years across vintages

Scope: acknowledges there are businesses he would personally like to hold ten years

34:11 20VC: How We Made $800M on Coursera | We Lost Money on Uber and Made Money on Lyft | We Did 3x on Postmates in 18 Months | DPI is King, MOIC is BS | We Dodged Theranos and I Still Lost Millions with Larry Aschebrook @ G Squared

Larry Aschebrook · Jun 16, 2025

Capital velocity is the right product for their LP base: 4x cash-on-cash over ten years across back-to-back funds, with optionality on the capital, is hard to beat

Their LPs want exposure to the fastest-growing tech companies while retaining the option to redeploy capital elsewhere every five years

Scope: explicitly not the right product for every LP

36:09 20VC: How We Made $800M on Coursera | We Lost Money on Uber and Made Money on Lyft | We Did 3x on Postmates in 18 Months | DPI is King, MOIC is BS | We Dodged Theranos and I Still Lost Millions with Larry Aschebrook @ G Squared

Harry Stebbings · Nov 21, 2025

Duration dominates headline multiples: a 4x DPI fund over seventeen years is equivalent to a 2.6x fund over ten years

Time-adjusted returns show the power of duration on material returns

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Max Altman · Nov 21, 2025

If you hold a position for fifteen years it needs to return seven or eight x to be worth it

66:32 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Harry Stebbings · Aug 8, 2026

A seventeen-year journey to a $2B exit like Olo's is not an attractive use of capital on an IRR basis, however great the business

Time to exit dominates IRR; the same capital could be deployed into faster-compounding rounds

Scope: acknowledges Olo is an amazing business and journey

72:41 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Tom Hulme · May 8, 2024

The right approach is to hold generational companies for a decade or two rather than optimizing IRR, but founders and early investors should still take some capital off the table when they get the chance

Building fantastic generational companies takes a decade or two, and Alphabet's balance sheet means GV faces no time pressure and can prioritize absolute returns over IRR

Scope: reflects GV's specific structure and permanent capital base

40:40 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Tom Hulme · May 8, 2024

Stripe will be a hugely bigger business in ten years than it is today

It is effectively a mutual fund on technology — developer-first, it gets in early with the next generation of incumbents and grows with them, and its execution has been brilliant repeatedly

Scope: acknowledges it had huge capital thrown at it and had to reduce OpEx

56:08 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Mamoon Hamid · Oct 21, 2024

Venture is ultimately a multiples business, but IRR takes a serious hit when you hold a position for fifteen years

A $3M check that became ~$170M was a 70x multiple, yet the IRR over fifteen years was only around 15%

28:33 20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

David Frankel · Aug 8, 2026 · hedged

Olo's IRR was likely unimpressive, but the outcome and the experience of the journey still made it worthwhile

Being involved from the founding through the board seat to the sale was the ride of a lifetime, and a $2B take-private is a good outcome

Scope: concedes Harry is probably right on IRR

73:12 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Harry Stebbings · Jun 16, 2025 · hedged

A manager's job is to adapt to moving markets, and G Squared could credibly tell LPs they would make more money with longer hold periods

The data now exists — companies like Palantir compounded enormously after the point where G Squared sold

34:36 20VC: How We Made $800M on Coursera | We Lost Money on Uber and Made Money on Lyft | We Did 3x on Postmates in 18 Months | DPI is King, MOIC is BS | We Dodged Theranos and I Still Lost Millions with Larry Aschebrook @ G Squared

Larry Aschebrook · Jun 16, 2025

Selling Palantir at $9 a share for a 3x was a huge missed outcome relative to holding

The stock is now roughly $80-90 a share; an LP who held the distributed shares funded participation in every subsequent G Squared vintage from that one position

Scope: nobody knew Palantir would run like that at the time

35:05 20VC: How We Made $800M on Coursera | We Lost Money on Uber and Made Money on Lyft | We Did 3x on Postmates in 18 Months | DPI is King, MOIC is BS | We Dodged Theranos and I Still Lost Millions with Larry Aschebrook @ G Squared

Tom Hulme · May 8, 2024 · hedged

Outcomes better than a 3x are available on late-stage positions like Stripe

57:23 Better than 3x outcomes remain achievable in late stage positions