LP expectations are set by VCs.

Reality is most VCs don't generate spectacular IRR (or any IRR at all) outside of the top 5%.

Revenue-based financing to tech companies is one model that is quite interesting.

> LP expectations are set by VCs.

Right, which is why a VC selling such product (low return but same as before high risk of failure) would have a tough time. They are essentially selling the ROI similar to that of real estate (or some similar asset class), but with higher risk of failure, lower resale value in case of a bust, and lower probability of being able to wait a crisis out by sitting on assets and not selling during a market downturn - what a deal.

> Reality is most VCs don't generate spectacular IRR (or any IRR at all) outside of the top 5%.

I don't think it matters for large LPs, as they diversify across a bunch of VCs anyways, and even those VCs have a collection of funds with wildly different returns (the KPCB fund that did an early investment in Google, e.g., did great, the KPCB cleantech fund was a bust, you ask two different KPCP investors and you'll get two very different opinions depending on their exposure).

Not disagreeing with any of your points, but there were probably very few LPs who were in one KPCB fund but not the other.

Which I think validates his point - i.e. it is all a wash, because the Google fund produced ginormous returns but the cleantech fund was bust. Especially considering that, if memory serves me correctly, Google was the only winner in that fund.