• J-Curve
  • In venture capital, the J-curve refers to the pattern of returns that is typically seen in the early years of a venture capital fund. In the initial years of the fund, returns are typically negative as the fund invests in startups and incurs expenses associated with managing the fund. Over time, as the startups mature and potential exits (such as IPOs or acquisitions) occur, returns begin to increase, resulting in a "J-shaped" curve when plotted over time. The J-curve is important to understand for investors in venture capital funds, as it illustrates the potential for negative returns in the early years of the fund and the importance of a long-term investment horizon.

More info: What is the J-Curve?

• Note vs Equity

  • A note is a short-term debt instrument that can be converted to equity at a later date.
  • Equity, on the other hand, represents ownership in a company and can be bought and sold on the stock market.

  https://www.youtube.com/watch?v=PtTDmeU-Kok

Asset Allocation Model

• An asset allocation model for high-net-worth individuals typically consists of a mix of different asset classes, such as stocks, bonds, real estate, and alternative investments like venture capital. The exact breakdown of the allocation will depend on the individual's investment goals, risk tolerance, and other factors. For example, a more conservative investor may have a higher allocation to bonds and real estate, while a more aggressive investor may have a higher allocation to stocks and alternative investments. It is generally recommended to diversify across asset classes and to periodically rebalance the allocation to maintain the desired risk profile.

More info: Ultra-High Net Worth Asset Allocation

• Capital Call

  • A Capital Call is a legal right granted to an investment fund's managers, allowing them to demand that investors contribute additional capital to the fund beyond their initial investment. Capital calls are typically issued when the fund requires additional capital to make investments or cover expenses. The call will specify the amount of capital required, the date by which it must be contributed, and any penalties for failing to comply with the call.

  https://www.youtube.com/watch?v=kYn4xNVjirw

• Carried Interest

  • Carried Interest refers to a share of the profits earned by a private equity or venture capital fund that is paid to the fund's general partners. It typically represents a percentage of the profits earned by the fund after all of the investors have received a return on their investment and is intended to align the interests of the fund managers with those of the investors. The general partners' share of the profits is often subject to a hurdle rate, which is a minimum rate of return that must be achieved before the general partners are entitled to receive carried interest.

  https://www.youtube.com/watch?v=kFKSpYoZPkw

• MOIC

  • MOIC stands for "multiple on invested capital." It is a metric used to measure the return on investment for a venture capital fund. MOIC is calculated by dividing the total amount of money returned to investors by the amount of money they originally invested. For example, if a venture capital fund returned $100 million to investors and they had invested $50 million, the MOIC would be 2x. MOIC is typically used in conjunction with other metrics, such as IRR (internal rate of return), to evaluate the performance of a venture capital fund.

• Returns

  • In venture capital, Returns refer to the profits earned by investors from their investments in startups or other ventures. These returns can come in the form of capital gains from the sale of equity, dividends, or other forms of distributions. The average returns for venture capital investments can vary widely depending on the stage of the investment and the success of the startup, but some estimates suggest that the overall average return for venture capital investments is around 20% per year.

• DPI vs TVPI

  • DPI stands for "distributed to paid-in capital." It is a metric used to measure the amount of capital that has been returned to investors relative to the amount of capital that they have contributed to a venture capital fund. DPI is calculated by dividing the total distributions to investors by the total amount of capital that they have contributed.
  • TVPI stands for "total value to paid-in capital." It is a metric used to measure the total value of a venture capital fund relative to the amount of capital that investors have contributed. TVPI is calculated by dividing the total value of the fund (including the value of unrealized investments) by the total amount of capital that investors have contributed.
    • More info: What is TVPI?
  • DPI and TVPI are both important metrics for evaluating the performance of a venture capital fund. DPI measures the amount of cash that has been returned to investors, while TVPI measures the overall value of the fund. A high DPI indicates that the fund has been successful in returning capital to investors, while a high TVPI indicates that the fund has been successful in generating overall value for investors.

• Hold Period

  • In venture capital, the hold period refers to the length of time that an investor holds an investment before selling it. The hold period can vary widely depending on the stage of the investment, the nature of the startup, and the overall investment strategy of the fund. Generally, venture capital investments have a longer hold period than other types of investments, as startups typically require several years to achieve significant growth and profitability. The hold period can also be influenced by factors such as market conditions, regulatory changes, and the overall performance of the startup. Here at Florida Funders, our funds have 10-year lives.

• Unicorn

  • A unicorn is a startup company that has reached a valuation of $1 billion or more. Some well-known examples of unicorn startups include Uber, Airbnb, SpaceX, and Stripe. These companies are often seen as disruptors in their respective industries and have attracted significant investment from venture capital firms. Despite their success, unicorn startups are relatively rare; as of January 2024, there are only around 1,200 unicorn companies worldwide.