An endowment invests $150,720,000 in WeGrow II, an early-stage venture fund with a 20% incentive fee...

 

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An endowment invests $150,720,000 in WeGrow II, an early-stage venture fund with a 20% incentive fee and a 5% preferred return [hurdle rate]. The fund invests in the following companies (for simplicity, ignore staged financing and management fees; assume instead that all investments occur at the end of their denoted year): Investment (Year Invested) Harvested (Year Harvested) Start-up Name SPE Incorporated NiteID Corporation D-Ton Incorporated IKL Limited $ 35,120,000 (2) $ 20,120,000 (2) $ 15,120,000 (2) $ 20,120,000 (3) $ 25,120,000 (3) $ 62,657,600 (7) $ 300,120,000 (9) $0 (8) H&L Innovations SimLife Technologies $ 100,120,000 (7) $ 125, 120,000 (10) $0 (9) $ 35,120,000 (4) Instead of a 5% preferred rate, assume there is an 8% preferred rate with a 100% catch-up. Required: a. Recalculate the yearly cash flows. b. What is the IRR to the endowment, net of fees? An endowment invests $150,720,000 in WeGrow II, an early-stage venture fund with a 20% incentive fee and a 5% preferred return [hurdle rate]. The fund invests in the following companies (for simplicity, ignore staged financing and management fees; assume instead that all investments occur at the end of their denoted year): Investment (Year Invested) Harvested (Year Harvested) Start-up Name SPE Incorporated NiteID Corporation D-Ton Incorporated IKL Limited $ 35,120,000 (2) $ 20,120,000 (2) $ 15,120,000 (2) $ 20,120,000 (3) $ 25,120,000 (3) $ 62,657,600 (7) $ 300,120,000 (9) $0 (8) H&L Innovations SimLife Technologies $ 100,120,000 (7) $ 125, 120,000 (10) $0 (9) $ 35,120,000 (4) Instead of a 5% preferred rate, assume there is an 8% preferred rate with a 100% catch-up. Required: a. Recalculate the yearly cash flows. b. What is the IRR to the endowment, net of fees?

Answer rating: 100% (QA)

To calculate the yearly cash flows for each company we need to determine the exit multiples for each company For this example lets assume the followin... View the full answer