There’s an expression in venture capital called “returning the fund.” It simply means that an outcome in the fund (out of say 20-30 investments in that specific fund) makes enough money to return 100% of the principal. For example, in a $100 million fund, an investment which makes you back $100m “returns the fund.” $200m would be “2x the fund.” And so on. Of course the assumption in calling this a positive outcome is that you invest much less capital to achieve this return – putting $100m into a single company and getting that amount back wouldn’t be a good investment. That’s why you’ll hear something more like “yeah, we made 50x on that investment and it returned 2x the fund.”

Historical industry data suggests it’s very difficult to meet performance targets for this asset class without having at least one 20x+ investment per fund. And often that one will also be a “fund returner” (or better). This is what is also drives discussions of power law outcomes and getting more capital into your winners.

But the other day I was doing some math for fun – what would a Homebrew investment need to pay out in order to not just return the fund it was in, but return the firm? By that I mean earn back every dollar our LPs have committed to us across our multiple funds ($210 million). And wondering how many firms have experienced a “firm returner” and what’s the latest in a firm’s lifecycle this has occurred (obviously it gets more difficult as you have more AUM. A multi-decade firm would need to likely make billions in a single investment to “return the firm.”)

As I thought about it more I realized it was likely more common than I’d originally speculated since we all know firms that have had a 5-9x fund within their first few several raised. So likely more of a vanity metric and one that’s already associated with high performing firms rather than a “once in a lifetime” occurrence.

Still though, it sounds pretty rad \m/ \m/