"A lot has changed over the thirty years that I've been representing emerging companies. Way back when, venture capital funds were small - $20 to $50 million, and they typically had ten year terms, with options to extend for another three, so that any non-public portfolio stock could be liquidated through an "at-last!" IPO or company sale. If a fund got lucky and sold a portfolio company early, it plowed the money back into new investments. In short, VC money was a lot more patient back then. Entrepreneurs were different, too. Almost to a man or woman, they wanted to build a company and run it for the rest of their careers.
"All that changed as venture capital got to be more popular with investors. In the 1990s, successful VCs started changing the deal they made with their limited partners. In the old days, a VC didn't make a dollar over their modest management fees (1 - 2% per year of the investors' funds) until the fund liquidated. Then the investors got 100% of their money out first. Only then did the profit get split up - typically 80% to the investors, and 20% to the VC fund managers."
