Daily Musings

Evening all

where Bilbo Baggins had Gandalf to whisk him away on adventures, I had today’s cab driver. At least, so I hoped—until he asked if we were headed in the right direction. Cutting my potential adventure in Frankfurt short I let him know that we were not. Proceeding on a now corrected and perhaps less adventurous course towards the welcoming blue light of my desk, I share today’s musings.

Cheers
Philip

Charts of the Day

Many have speculated on what truly drives venture capital fund performance. As I dig deeper, some early findings point to clear trends:

• Fund Size Matters: Smaller funds consistently outperform, regardless of vintage year

• Manager Quality and Track Record: Just as crucial, if not more so. The question becomes, where do we find these top-tier managers?

Data reveals an asymmetric advantage for high-quality managers in early-stage investing (Seed - Series A) compared to later stages. This distinction appears to concentrate more top-decile VC managers in the early-stage landscape.

A Growing Gap in Performance: Quality remains paramount, but its importance has only grown. The performance gap has widened over time. In fact, top-performing funds now show an IRR delta nearly 3x larger compared to top-quartile funds in 2014.

22% of no November cuts. Most o the market remains in the camp for 25bps cut in November - recent signals of potential cooling in inflation (as the CPi report indicated slowdown in the economy) may aid the sentiment for further cuts.

Trouble abound in LBO land. Moody’s has surely not made a lot of friends publishing their latest reading on B3N (what sounds like a star wars robot is another fancy way to say: B3 Negative - a very junky rating) holdings of varying PEs. Clearlake and Platinum infamous for their LME (in this case not the London Metal Exchange but the Liability Management Exercise) involvements (think DE Swaps on FinThrive and failed LME on Wheel Pros) hold the largest reported shares in distressed corporates.