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Comment by dpark | Hacker News Reader

> From what I understand (correct me if I'm wrong), once VCs have an exit, they can't reuse the proceedings for a subsequent investment.

Why wouldn't they be able to use the funds for a later investment? Isn't that what VCs do in general? (Genuine question; not being snarky.)

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I believe that most funds are structured in a way that the VCs have to pass the proceedings (minus their cut of course) to their LPs (investors).

Correct. However many funds do not distribute returns that are less than a certain amount (1.5x is typical, I think)

So in you opinion, assuming that Sequoia had to distribute the "overnight" 2X to their LPs, was that a good investment for them?

I think VCs are looking to provide bigger returns than this.

Thanks. I wasn't aware of that.

No, VCs generally don't recycle their wins. A VC fund is at it's heart a company that is expected to live for ten years; first raising capital, then investing the capital, and then spending it's final years collecting the proceeds of the exits, as the successful investments get acquired or IPO.

Note: VC firms will have many different funds, each with different origination years, so while the fund might last a very long time, the individual funds are not supposed to remain illiquid forever.

They are often able to recycle low returns. I think 1.5x and lower is typical.

Am I correct to think it's 1.5x, and within the investment period (first few years of the fund)?

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