Ask AI
Log In Sign Up
Go to Fund Economics
Previous Question Next Question
0
Fund Economics

What is Internal Rate of Return (IRR)

Asked by:
Community Member
1
0
May 03, 2023
What is Internal Rate of Return (IRR)
1 answer
0
Neal Strickberger
Accepted Answer
May 03, 2023
A standard financial measurement used for investments - based on cash flows. For benchmark, good real-estate investments return 8-11%, upper-quartile VC funds (after 7-10 years) achieve IRR averaging 20% (but with standard deviation of 30!) Note that measuring IRR only makes sense after investments have exited, a single large return will drive all of the fund stats (and make everyone happy). See Power Law.
Add a comment

Log In or Sign Up

Please Log In, or Sign Up to participate in the discussion.

Log In
or
Sign Up

Apply to VC Lab Cohort 17

Get full access to Decile Base and the Decile Hub venture platform for free by joining the VC Lab program.

Apply to VC Lab Cohort 17
Related Questions
What is the Optimal Way to Display a Single Management Fee Rate on Slides for a 10-Year Fund? 1 May 03, 2023 What Methods Do You Use to Estimate Fund Liquidity and Can You Recommend References for Comparing Outcomes? 0 May 03, 2023 Does Anyone Have a Template to Calculate Unrealized IRR for Early Angel Portfolios Across Rounds? 0 May 03, 2023 Is a 7-8% hurdle rate common for VC funds in Spain? 0 May 03, 2023 What is the most common free structure for a fund of funds? 1 Oct 24, 2024