Fund Structure
Holding Period
The length of time an investor holds an investment before exiting, typically 5-10 years in venture capital.
Holding period is the duration between initial investment and exit. In VC, the median holding period has lengthened from 5-7 years to 7-10 years as companies stay private longer. Longer holding periods affect IRR calculations and LP liquidity expectations.
In Practice
The fund's average holding period was 8.3 years — investments made in 2018 were still unrealized in 2026, with exits expected in 2028-2030.
Why It Matters
Longer holding periods reduce IRR even if total returns are high, because time is in the denominator. This has implications for fund structure, LP expectations, and GP incentives.
VC Beast Take
The holding period in venture keeps getting longer. At some point, 'venture capital' became 'really patient capital.' Your LPs better be okay with that.
Related Concepts
Further Reading
The Tax Benefits of Angel Investing: QSBS Explained
How Section 1202 QSBS can exclude up to $10 million in capital gains from angel investments — the requirements, holding periods, and how this tax benefit dramatically changes the return math.
Exercise or Wait? A Guide to Startup Stock Option Decisions
Should you exercise your stock options now or wait? The answer depends on taxes, risk tolerance, and your company's trajectory. Here's a framework for making the right call.
What Happens to Your Stock Options If Your Startup Gets Acquired
Acquisitions are where startup equity either pays off or evaporates. Here's how acceleration clauses, liquidation preferences, and deal structure determine whether employees see real money.
Angel Investing Returns: What the Data Actually Shows
A data-driven look at angel investing performance — Kauffman Foundation research, AngelList data, power law dynamics, and the harsh portfolio math most angels never confront.
LP vs GP: How Venture Capital Fund Structure Works
A clear explanation of how venture capital funds are structured, the roles of limited partners and general partners, fee economics, and how fund structure affects startup founders.
The Complete Guide to Startup Valuation Methods
How do investors decide what your startup is worth? A deep dive into every major valuation method from DCF to comparables to the VC method.
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