The biggest venture outcomes often take 8-10 years or more to mature. Instead of optimizing for quick IRR, early-stage VCs should embrace long holding periods. This "duration" is a feature that allows for massive value creation and aligns with building truly transformative companies, prioritizing multiples over short-term gains.

Contrary to the instinct to sell a big winner, top fund managers often hold onto their best-performing companies. The initial 10x return is a strong signal of a best-in-class product, team, and market, indicating potential for continued exponential growth rather than a peak.

While many investors focus on annualized returns (CAGR), VCs prioritize the Multiple on Invested Capital (MOIC). Their success hinges on finding investments that return 50x or 100x the initial capital, which can carry an entire fund regardless of how long it takes.

Baylor's largest private allocation is in growth equity. The strategy's key appeal is mathematical: with fewer companies going to zero, the fund's overall returns aren't dragged down by total losses. This creates a more reliable path to high returns compared to the hit-driven nature of early-stage venture.

Due to strong performance, Williams' venture capital portfolio has ballooned to nearly 18%, far exceeding its 6% policy target. The team resists changing the target, prioritizing long-term liquidity needs over chasing recent performance or rebalancing aggressively.

Major university endowments, often perceived as conservative investors, were among the earliest and most significant backers of SpaceX. By taking large, early-stage risks in companies like SpaceX, these funds operate like venture capital firms, securing massive returns that significantly boost their value.

The venture capital return landscape is shifting. As companies achieve massive scale while remaining private, late-stage funds can generate top-quartile returns that match their early-stage counterparts. This challenges the long-held belief that the highest multiples are exclusive to seed and Series A investing.

To ensure winning investments materially impact the endowment, Baylor reverses the typical allocation logic. It decides on a target dollar amount per underlying company (e.g., $3 million) and sizes its fund commitment accordingly, based on the fund's expected number of investments.

Internal Rate of Return (IRR) is a misleading metric because it implicitly assumes that returned capital can be redeployed at the same high rate, which is unrealistic. The true goal is compounding money over time. Investors should focus more on the multiple of capital returned and the average capital deployed over the fund's life.