Little late to this. Since it isn't the first time I'm seeing this critique, I can't help myself. It isn't just "not the job" of a venture fund to manage public equities. Few factors to consider: the firm & fund, the market, and fund-level risk.
https://twitter.com/teddypowday/status/1305501745053863939
To set the stage, when a VC firm has a public outcome, it can (1) hold the stock (or sell stock for cash, recycling to invest or use for fees, etc.) or firm can (2) distribute stock and/or cash (by selling stock). Those are the options. (2), disty of of cash / stock most common.
The firm & fund: even if a venture firm wanted it to be their job, they're not set up to handle pub. equities from a legal/admin/acctg/position mgmt/other perspectives. GP is a venture investor, they're not tracking the stock, research, street chatter to model price movements.
The firm & fund: plus securities laws are complicated, and it requires a lot of work (distraction) to stay in front of everything especially when you have GP BoD members and you're an affiliate subject to 144 (how many VCs do you know can tell what you what a stock legend is?).
The firm & fund: also, great firms have great LPs AND great IR. LPs have venture allocations in portfolios with publics and they can handle stock well! IR-wise, VCs know what their LPs want+giving LPs what they want means they keep coming for future funds (i.e. give them stock!).
The market: TLDR; the market prices in VCs holding (overhang). VCs generally get rid of stock. Street knows the fund holds supply and knows they're sellers, so prices this in until VC doesn't (why buy at elevated prices when 30% of company probably will come to market).
The market: Real Real stock price was (anecdotally) impacted last yr by "sloppy" VC liquidation. Better for the stock (and company) if the venture firm can reduce it's holding at the fund level. VCs likely consider the company when making these decisions not just their fund.
Risk: it's also better for the fund to reduce fund level holdings. When you have a public outcome from a fund, it is typically a pretty special / fund returning one. If most funds don't return >1x, then it seems logical to disty stock, lock in fund returns, but preserve upside.
Risk: I'll say it again, by distributing stock instead of holding onto it in fund, any VC can de-risk the fund (which is already probably an exceptional fund - holding for 10x vs. 7x is just sort of... greedy), and preserve upside.
Now, my buried lede:
Shopify position for BVP isn't that easy to track (I'm counting 6-7 diff BVP reporting entities alone). But BVP was selling shares in follow ons as recently as August 2016... so the outcome isn't as headlined "sold at IPO".
sec.gov/edgar/search/#…
Shopify position for BVP isn't that easy to track (I'm counting 6-7 diff BVP reporting entities alone). But BVP was selling shares in follow ons as recently as August 2016... so the outcome isn't as headlined "sold at IPO".
sec.gov/edgar/search/#…
If BVP owned 30% at IPO it was at least $500M after lockup rolled off (returned 1/3 of fund) Plus, the fund had Mindbody, SendGrid, Box, 2U, Pinterest in it. For a great fund, there is no reason to hold Shopify (or any public) risk at fund level (but bet the GPs held the stock!)
Hindsight bias: "IDIOTS! Stocks only go up", but framed in context of how sophisticated venture firms think about these sorts of things, plus acknowledging no one could have intellectually honestly modeled $SHOP's current price in 2015, seems like a logical decision they made.
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