A decade or two ago, funds were “one-size-fits-all,” but as the industry has grown, investors want more tailored offerings, from specific sectors to geographies. “A natural evolution of that is to specify timeframes.”
Private equity funds take a longer view of lower returns
This is a welcome development and I would hope to see these longer dated funds grow and become accepted in Venture Capital as well; indeed it is probably even more important for venture - especially early stage venture - as it would allow investors to more easily “ride their winners” and would be better adapted to the exponential valuation growth trajectories of the best start up companies. With 10 year funds, GPs are more often than not put in a position of seeking an exit for their portfolio companies just at the time when they are getting maximum traction.
I would suggest that this is particularily true for (most) financial services startups as the nature of this industry (zero tolerance for error-prone products, highly regulated environment, the requirement to build very high-trust relationships with customers, etc.) means that all other things being equal, such companies take 2-5 years longer to mature than other “technology company” startup categories...
