“Every venture company is writing a tax to NVIDIA in some way, shape, or form, writing their tax to a hyperscaler in some way, shape, or form. … All of them are available in the public markets, or they will be soon in the public markets, for someone to invest in a no-fee, no-carry index fund. And so you have to think about your IRR as I've got to beat that with a thousand basis points to justify anyone giving you capital in the private markets.”
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch · Startups & Venture · October 2026
Asked whether cash returned or rate of return matters more, Ganesan said that when he started in venture nobody focused on rate of return, and now you have to. His reason is that the big public tech companies collect from every startup, so they are the benchmark a fund has to beat.
Transcript
No. I think the velocity of the business is very important for venture capitalists, right? And the velocity will determine a bunch of things, right? Because the other reason why your dilution goes down is like if you have a fast uptick in valuation, the amount of ownership you've got to give for your next set of human capital is a lot lower, right? So you are a $200 million company and you're giving, you know, 2% of the company to hire a senior exec, right? That's pretty meaningful. You quickly become a $2 billion company. You don't need to get, you're going to give RSUs and you give the same person $20 million, right? Which is 0.1%.
DPI or IRR?
Both. I mean, you can. I do think actually that you can't have IRR without DPI. I think the question you're trying to ask is, hey, will you settle for a larger DPI over a longer horizon or do you want quicker DPI with a faster IRR? I think the reality of venture when I joined, this is now dating myself 28 years ago, people didn't focus on IRR. People were like focused on cash on cash return because IRR took care of itself. I think in today's venture, the game has changed. You have to focus on IRR. You know why? Because there's no way for venture to be successful in today's era without the Mag 7 participating in everything you're doing. Every venture company is writing a tax to NVIDIA in some way, shape, or form, writing their tax to a hyperscaler in some way, shape, or form, and possibly writing a tax to the foundational model in some way tax or form. So if you're going to be successful, right, you're going to be writing a tax to all of them. All of them are available in the public markets, or they will be soon in the public markets, for someone to invest in a no-fee, no-carry index fund. And so you have to think about your IRR as I've got to beat that with a thousand basis points to justify anyone giving you capital in the private markets.
You mentioned town. I had JD on the show. Really like him. I've known him since the plan days. I'm pissed off about that one because he started the company when he left. And I remember talking to him about it when he saw it. And he was doing something in some terrible space. No offense. He'll agree with me. And then he obviously pivoted.
Tax, I think they were doing something in tax and pivot. Thank
you. I'm too old for this shit.
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