Investing in startups is a funny business. Sometimes venture capitalists find themselves with a company that is growing and profitable. But if there is no opportunity for an IPO or acquisition by a bigger competitor, there may not be an exit on the table that allows the VCs to get a return on the money they invested which satisfies the backers who support their fund.
“It’s a broken system in some ways,” says Jay Levy, co-founder and partner at Zelkova Ventures, over a lunch at Five Napkin Burger in Hell’s Kitchen. “The problem is that most funds are structured so that you can’t reinvest gains from an exit. This can put VCs in a position where their incentives are misaligned across multiple funds. We think allowing returns to be put back to work is the healthiest system for us, our backers and the companies we invest in.” An evergreen fund, Levy believes, allows for success with smaller returns.
To read the full, original article click on this link: New York’s Zelkova Ventures tries an evergreen approach to funding startups | VentureBeat
