Glossary - Vintage
In the context of venture capital and private equity, 'vintage' refers to the year in which a fund commenced its investment period. This is critical for investors as it helps in comparing the performance of funds established in the same year, taking into account the variations in market conditions. Vintage year can affect the fund's return prospects due to differing economic cycles.
Also known as
- Fund Year
- Investment Year
Use cases examples
- Limited Partnership Agreement: The Fund’s activities shall commence in the 2023 vintage year, marking the year in which the initial capital contributions by Limited Partners are called.
- Venture Capital Firm's Annual Report: Our 2015 vintage funds have outperformed our 2010 vintage in terms of internal rate of return (IRR), indicating a stronger investment selection and economic climate.
Considerations for investors
- Investors should evaluate the performance of vintage funds against those of the same vintage to account for market conditions and economic cycles.
- Considering the vintage year is essential when allocating resources, as it might influence the investment horizon and risk appetite of the fund.
Considerations for founders
- Understanding the vintage of potential investor funds can provide insights into their investment strategy and economic outlook during the fund's active investment period.
- Founders should note that the age of a fund may impact their urgency to invest or exit, as funds later in their vintage year might seek quicker returns.
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