I work at the VC that invested in AirWatch last year. We're happy with the investment given that it was a relatively quick and clean exit given our typical 3-5+ year exit timeline.

Thanks for replying! That's what I love about HN - someone almost always has an expert/inside answer.

I gather when it's that fast and that big, you might not need that 10x multiple.

It's definitely not a total win - first, the return isn't actually ~50% given the $365M in installment payments and assumed unvested equity; second, your LPs committed capital to your fund expecting a certain IRR over the length of the fund (7 years i'm guessing? 10?). Getting them a low- to mid-double digit IRR over 1 year is nice, but it also means that they now have to spend money figuring out how to redeploy that capital for the next 6 years.

That's not how VC/PE typically works. Exit capital is returned, not reinvested.

Sorry I wasn't clear with my pronouns (?) - "they" referred to the LPs, not Insight. Meaning that now the LPs (not Insight) have to figure out how to reinvest the capital that was returned.

lol. Oh boo-hoo, I have all this extra money sitting around that I didn't plan to have for at least 6 years and I need to figure out how to use it. Woe is me, woe is me. ;)

But yeah, I do get what you're saying about having capital that isn't properly invested = loss of potential gains... I guess. Very first-world problem though :)

Hi mlyang, can I contact you next week to quickly talk about a product for the desktop virtualization market that I think have a good potential?

"And doesn't it show just how insane VC funding is, when you realize that some of the investors may actually be disappointed?"

I imagine I'd be disappointed too if this 50% return didn't cover the 55%-100% losses on other investments... VC investment seems to be a game of extremes, both up & down.

(Per above comment, I work at the VC that invested in Airwatch): Because Insight is a growth stage VC deploying a significant amount of capital with each investment (in AirWatch's case, it was 200M), it's aiming for virtually all hits (unlike an earlier stage VC that's aiming for 1 out of 10 of their portfolio co's to succeed wildly)-- which it almost always succeeds in achieving. This also means that it gets lower returns on its funds relative to an earlier stage VC. Given the growth stage focus, that's to be expected and its LPs prefer the reliable (and relatively substantial) upside given the fund sizes. AKA Insight's not dealing with 55%-100% losses on other investments.

They didn't make 50%, that isn't how 1x liquid prefs work. They take back their principle first so +$225m, then from there they split the portion that they own, say 22.5% of 1.3 is +$293m. Total around $523m or 130% gain. For an investment fund at this stage, that is well within normal gains.

That's only true if the investment was participating preferred equity (sometimes known as "double-dipping"); if it was convertible preferred equity then it's an either/or scenario (they choose between getting their liquidation preference, or converting to common equity and getting their pro rata %). Insight used to be big on participating prefered so I wouldn't be surprised if you're right, but things may have changed..

Doesn't look like there is much left for the employees?

Never is ;-)