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The Twenty Minute VCDavid Clark: Lessons from 32 Years of Fund Investing - Why Exits Will Be Larger | E1131
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At a glance
WHAT IT’S REALLY ABOUT
Veteran LP Debunks Myths On Fund Size, Power Laws, And Liquidity
- LP David Clark of VanCampen (VanCap) reflects on 32 years backing venture funds, emphasizing that venture is a power-law business where a tiny fraction of companies drive industry-wide returns. He challenges the narrative that billion‑dollar funds can’t generate fund‑returning exits, showing data of numerous $1B+ distributions and even a $15B single‑fund outcome. Clark explains VanCap’s highly concentrated, outbound-only, top‑tier manager strategy, their skepticism toward emerging managers, and why they often wait until Fund III to commit. He also discusses liquidity timing, succession in VC firms, fund size, fees, and why venture remains attractive despite mediocre average returns, provided you can access the very best managers.
IDEAS WORTH REMEMBERING
5 ideasVenture only works if you access the true top-tier managers.
Clark’s analysis of 1,200 funds (2000–2015 vintages) shows over 50% haven’t returned even 1x capital, only ~6.6% reached 3x DPI, and just ~2.6% hit 5x, underscoring that average venture is a poor trade versus public markets; alpha comes from consistently backing the few managers who capture the 1% of mega‑exits.
Billion-dollar funds can still produce fund-returning investments.
Contrary to industry chatter, VanCap’s internal data show 45 investments that each returned over $1B to a single fund—and were full fund-returners—many from the last 7–8 years, including one $15B outcome, meaning large funds are not inherently incapable of strong multiples.
Compare today’s fund sizes to exit sizes 10–15 years ahead, not today.
Clark argues the right mental model is to match current fund size with likely exit scales when those companies actually mature; as technology’s share of the economy and market sizes grow, he expects future exits to be larger, supporting big funds if they’re in the very best companies.
Rigorous focus and outbound sourcing beat trying to see every manager.
VanCap does almost no inbound; they build a list of top ~1% companies and then work backwards to identify and pursue the early-stage investors behind them, preferring to deepen exposure to proven franchises rather than chase hundreds of emerging managers.
Fund III is often the optimal entry point for an LP.
Clark says they most often commit at Fund III, when there is enough evidence that a manager has found at least one true outlier and begun to build a repeatable franchise, but before the firm becomes totally access-constrained.
WORDS WORTH SAVING
5 quotesVenture is a power law industry, and it’s 1% of the exits that ultimately generate the bulk of the returns created by the entire industry globally.
— David Clark
The idea that you can’t get a fund returner from a billion-dollar fund is just untrue.
— David Clark
You don’t have to do every great manager out there… you just have to make sure all the managers you do are great.
— David Clark
How do you know the process works unless you judge it by the output?
— David Clark
If everyone agreed on everything, life would be so dull. And that’s what makes a market.
— David Clark
High quality AI-generated summary created from speaker-labeled transcript.
