Countdown to exit: impact of a fund's vintage on fundraising

May 2024

As a seasoned start-up mentor, I’ve helped 100+ founders raise money, from advising on pitch decks, to narrowing down the list of VCs to target based on their funds’ thesis to setting expectations about how long fundraising takes and what it may entail. But I had no idea how venture funds worked! (Thank you to the Venture Partners Fund Fellowship and the VC Lab Venture Institute for teaching me about this!) 


If a typical venture fund has a 10 year-lifecycle in which to make investments and profits, with:

Depending on the fund you get investment from, you may only have 2 to 3 years before the start-up needs to exit. Here’s why that is.

Goals of a Fund: Profits Before Close

Funds provide high-net-worth individuals (and other organizations) with an asset class to diversify investments, expecting a 2.5x+ return on investment; in return, fund managers charge management and fees on profits (also called carried interest), typically as at 2 and 20 fee breakdown structure.

Funds see profits, also called realized gains, when a start-up has an exit. Typically, this is via an IPO, an M&A, or a stock sale on the secondary market, the most common being M&A

As an aside, a fund could extend its lifecycle if there is such a provision in the legal agreement with its investors and if certain conditions are met. But you don’t want to go into a fundraise depending on this!

How a Fund’s Lifecycle Impacts Your Company

Suppose a typical venture fund has a 10-year lifecycle to make investments and profits. The first 5 years are spent investing in start-ups, and about 2-3 years for a portfolio company to execute an exit plan. 

If you become a portfolio company in year 4 or 5 of a fund, you only have 2 to 3 years before the start-up needs to exit!

The closer the fund is to the end of its investment period, the more picky it tends to get. At this point, the fund managers have seen over 3000 pitch decks! They also may have portfolio companies that would be your close competitors. It’s harder to stand out.

How to Find out Where a Fund is in Its Lifecycle

You’re already researching the VC firm to see if your product/service aligns with its thesis. Check to see if there’s information about their funds and when they launched.

Approach 1: Lookup using Crunchbase

For example, Crunchbase shows us that a16z announced Fund II last month (in April). 

Approach 2: Research Using Combination of VC Website and Press Releases

If Crunchbase does not have that information readily available, see if there’s a way to collate when they made which investments in each portfolio company. 

Approach 3: Ask

You’re also already evaluating the fund. To help you further see if they’re a fit, ask: 

Is the timeline and the metrics in line with your expectations?


In discussions of this blog post on LinkedIn, the community points out that: 

Dony Zaidi summarized it best: "Land a VC investor? The clock is ticking..."

Your exit countdown starts as soon as you’ve closed your first investor! 

Good luck!

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