It was 20 months ago that TechCrunch founder Michael Arrington launched CrunchFund, a venture capital firm that had support from AOL, the company that had purchased TechCrunch one year earlier. CrunchFund started off with three partners out of which MG Siegler recently announced his move to Google Ventures.
With nearly 100 portfolio companies and now left with only two partners, what is the future of Michael Arrington’s venture capital effort, CrunchFund?
According to Dan Primack of Fortune, CrunchFund is performing quite well. He says the CrunchFund has a 20%-30% internal rate of return, which is about in line with what a venture capital fund is expected to deliver.
To date, CrunchFund has invested just over half its capital into more than 80 companies. Ten of them already have experienced liquidity events — including “acqui-hires” — while only one has been written off. The current internal rate of return (IRR) is somewhere between 20% and 30%.
That data signifies two things: (1) CrunchFund doesn’t actually need to raise a second fund yet, with plenty of dry powder in the till; and (2) CrunchFund should be able to raise a second fund when it does go out, based on performance.
There is one interesting part about the future of CrunchFund – a replacement for MG Siegler.
The talk of the town is that MG was the man behind sourcing new deals and was the most active out of the three. Now that he is gone, it will be interesting to see how the fund proceeds and who can take his place. Also, Siegler’s departure is said to be fairly abrupt because although he was in talks with Google Ventures since a few months ago, he informed CrunchFund only last week.
A CrunchFund investor told Fortune, “A lot of venture capital is about who you know and what people think about you, but only because we all believe that has an impact on performance. If CrunchFund ultimately generates good returns, he’ll get the money [for a second fund]. But it’s still too early to send him another check, or to tell him to kiss off — even though there are probably people who want to do both.”