Venture Capital Investment Strategies - Venture capital firms should consider taking companies public now, as current business models are creating high-margin businesses [1][19] - New allocators or investors need access to top decile managers to consistently achieve returns above the Public Market Equivalent (PME); otherwise, even top quartile performance is insufficient [1] - The venture industry is seeing a shift in partnership dynamics, with increased changes in partnerships over the past two years, driven by factors such as reduced compensation and a desire to avoid current market challenges [10] - The industry should be wary of multi-stage platforms, as the large fund sizes make it difficult to achieve the same returns as in the past [12] - The industry should be aware that thematic funds are approached agnostically, focusing on finding great partners with aligned skill sets rather than adhering to specific mandates [20] Endowment Management - Carnegie Mellon University (CMU) manages $4 billion on behalf of the university, with 85% allocated to equity and 15% to fixed income [6] - CMU targets 50% of its portfolio in privates (venture capital, private equity, real estate, natural resources, private credit) and the other 50% in hedge funds and liquids (public equities and fixed income) [6] - CMU is overweight venture by 5-10 percentage points compared to most endowments of its size and underweight hedge funds and real assets [6] - Endowments are facing headwinds, particularly those that may be subject to taxation, which could impact their draw and investment strategies [11] Venture Capital Fund Performance & Metrics - The median Internal Rate of Return (IRR) for mature venture capital funds is about 8% net, with the top quartile at 15%, and a Multiple on Invested Capital (MOIC) of about 25x [6] - Top quartile Distributed to Paid-In Capital (DPI) from 15-year vintage funds (1998-2015) is 18x [6] - A key question for new allocators is whether they will have access to top decile managers, as only those consistently achieve returns above the PME [6] - The industry should be aware that a 6x gross return is needed to achieve a 4x net return, considering fees of 25% and 30% for early-stage funds and 2% and 20% for growth funds [13]

Core Viewpoint - The article discusses the performance benchmarks of private equity funds in China, highlighting the challenges and expectations of Limited Partners (LPs) regarding return timelines and the importance of data transparency in the industry [4][5][7]. Group 1: Fund Performance Metrics - The report indicates that achieving a DPI (Distributions to Paid-In capital) of 1 within 7 years is considered excellent, while 9 years is the norm, and 13 years is a warning sign for fund performance [14][27]. - For funds established for 5 years, an excellent DPI can reach 50%, while those in the bottom quartile may take approximately 13 years to break even [14][27]. - The performance data from 2008 to 2023 shows that the top quartile funds have consistently outperformed, with a DPI of 2.03 in 2008 and declining to 0.00 by 2023 [15]. Group 2: Comparison with U.S. Funds - The article compares the performance of Chinese VC funds with U.S. VC funds, revealing similar return timelines: top quartile U.S. funds take 7-8 years to break even, while median funds take around 9 years [16][27]. - The findings suggest that the perceived slowdown in DPI is not unique to China but reflects a broader trend in the VC industry [18]. Group 3: Importance of Data Transparency - The report emphasizes the need for improved data transparency in the Chinese private equity market, as the current lack of transparency complicates the accurate assessment of fund performance [7][28]. - The Benchmark report serves as a critical tool for LPs to evaluate their investments and assess new funds, highlighting the importance of reliable data in establishing industry standards [8][28]. Group 4: Performance Realization - The article introduces the "performance realization degree" metric, which measures how much of the total value (TVPI) has been returned to LPs as cash (DPI), indicating that Chinese funds have a higher realization degree compared to their U.S. counterparts [22][28]. - The findings suggest that while the overall performance of Chinese funds appears strong, the realization of returns in cash is crucial for true value creation [28].