David Rosenthal: evaluation

Transcript context

…Yeah. I mean, presumably another Nestle would have to come along in some amount of time. You can really see the dynamic here play out where the founders are like, “we don’t want to sell,” and they end up keeping all their shares. And the Fidelity’s are like we need to get out of this business. We’ve seen great growth but my God, we need a way to get out of this. You almost wonder did Fidelity tee this whole thing up with Nestle. Well, and not just Fidelity too. I mean, don’t forget there have been VCs on the cap table here since 2008. So almost 10 years and venture capital funds have a life cycle. This is something that I think a lot of people don’t really understand unless you're an insider in the business. But the typical life of a venture capital fund partnership/limited partnership is 10 years. And what that means is that from the time the fund was raised until whatever that data is in typically 10 years, like you're supposed to wind up the whole fund and give all the money back to investors at that point. Now, in most cases there will be provisions to extend the life of the fund that almost always does happen but still then as the VC, you're having to go back to your investors every year and keep asking for an extension and eventually they’re going to get tired until you know. And then what happens, David, this is a good little VC 101. Like what if the LPs say no and there’s still shares owned of these private companies that haven’t got liquidity yet.…

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