VC Returns Revealed: Thrive Capital Outperforms as Market Slowdown Hits VC Performance
Fund performance data from UTIMCO's latest filing shows IRR, China woes
Fresh data from UTIMCO, the investment office of the Texas state university system, shows that Thrive Capital has substantially outperformed other funds over the past three years, an early sign of success for its strategy of betting big on the growth rounds of top AI companies.
Thrive’s momentum, however, was among the few bullish signals we found in the UTIMCO data, one of the only public sources for venture return information.
Fund performance overall is trending downward as measured by IRR (internal rate of return), even for the very successful “vintages” of the mid-2010s. Many of the banner vintages we’ve referenced before, like IA Ventures’ 2015 funds, saw their IRR metrics fall year-over-year from last year.
Most newer funds, for their part, are moving more slowly along the IRR “J-Curve”: returns tend to be negative for the first few years of most funds before (hopefully) turning north. Sequoia funds launched in 2020 and 2021 are doing better than most of their peers, though of course it’s still early.
The contraction of China’s startup economy and the political barriers that now stand in the way of investment by U.S. firms is also apparent in the UTIMCO data we reviewed, especially in the returns of GGV.
It’s no secret that venture returns are under pressure, but the trend of declining IRR year-over-year, which began in 2022, is becoming more evident.
This is especially painful for LPs like UTIMCO in light of the big gains in public equity markets over the last two years. Even over a 10-year period, UTIMCO’s returns on private equity and venture, which they lump together, lag the S&P 500, per their disclosures:
The selected IRR data we reviewed is from UTIMCO’s most recent close on Nov. 30, 2024, and reflects the performance of funds from Thrive Capital, Initialized Capital, Y Combinator, GGV Capital, Sequoia, HongShan, Peak XV, Union Square Ventures, IA Ventures, and Forerunner Ventures. (There’s a delay of about a month from when the reporting period closes and when the data is posted.)
Read on for an inside look at how some of Silicon Valley’s top venture firms are performing, including charts showing how their IRR has shifted over the years.
Paying subscribers, click here for a link to the full post since it will likely get cut short in your email inbox.