A Fund Carries Its Starting Market With It
A fund's start year shapes entry prices, funding access and chances to exit. Funds raised on either side of a market reset face different conditions. Similar vintages give a fairer comparison, though vintage alone does not prove manager skill.
Hamilton Lane's portfolio plan Vol. II shows one way to use that context. It compares IRRs by strategy within vintage years and then asks whether the return exceeded a public-market alternative. The absolute fund number becomes one input into the judgment.
Hamilton Lane notes that venture vintages after the global financial crisis averaged roughly 20% net IRRs. Some still held large amounts of unrealized value. The average was therefore not based entirely on cash returned.
Vintage and Strategy Both Affect the Comparison
A fund that invested heavily in 2021 may follow a very different valuation path from one that started deploying in 2023, even when both target the same stage. Ignoring that difference can assign the market cycle’s effect to the manager.
Vintage supplies the first filter, while stage, geography, fund size and reporting basis refine the comparison. A seed fund and a growth fund from the same year still face different failure rates and holding periods.
Age Changes What the Metrics Can Prove
| Fund stage | What the numbers may show | What deserves caution |
|---|---|---|
| Early years | Investment pace, cost, early write-downs, and first marks | IRR can move sharply on small valuation changes |
| Middle years | Portfolio separation, follow-on choices, and growing TVPI | Large unrealized positions may dominate the result |
| Later years | DPI, exit quality, tail value, and extension needs | High RVPI may signal slow liquidity or stale marks |
Young funds have little cash returned, so company evidence explains much of their progress. One financing round can move an interim rank. As the fund ages, distributions reveal more about success and remaining value faces a shorter path to liquidity.
The differences between vintages can be material. Cambridge reported an 11.1 percentage-point range in first-half 2025 between the weakest and strongest key VC vintage returns in its index.
The Same TVPI Becomes More Credible With Cash
A 3-year-old fund with 0.1x DPI and 1.5x TVPI is mostly unrealized. A 10-year-old fund with 1.7x DPI and 2.0x TVPI has already returned far more cash. The second multiple carries less valuation risk even though it is only modestly higher.
Young vintages often rely on residual value. Older funds have had more time to turn holdings into distributions.
Vintage Age and Return Interpretation
The same TVPI is more credible when a larger share has converted into DPI.
View maturity assumptions
| Fund age | DPI | TVPI | Interpretation |
|---|---|---|---|
| 3 years | 0.1x | 1.5x | Mostly driven by marks, with limited cash evidence. |
| 7 years | 0.8x | 1.8x | Realization evidence is emerging. |
| 10 years | 1.7x | 2.0x | DPI becomes central to judgment. |
What the Vintage Comparison Reveals
A common reporting date makes funds easier to compare, while separate DPI and residual value distinguish cash from marks. Small peer groups can have unstable quartile boundaries. Actual deployment years also reveal timing differences within the same headline vintage.
Manager decisions explain the result within that market context. Ownership bought, reserve choices and progress from marks to cash reveal more about skill than the vintage rank alone.
Frequently Asked Questions
Is vintage year the same as investment year?
Vintage usually means the year a fund starts investing, though it may deploy capital for several years after that. Funds with the same vintage can therefore invest in different market conditions.
Can one weak vintage ruin a venture portfolio?
One weak vintage can hurt, but a portfolio built over 7 to 10 vintage years is less dependent on a single market environment. Commitment size within each year still determines how much protection that spread provides.