Roger Ehrenberg on Venture Returns, Liquidity and Life After Success

Roger Ehrenberg argues that venture capital’s early stages will remain distinct from institutional asset management even as capital floods the industry. In conversation with Harry Stebbings, the IA Ventures founder discusses fees, limited-partner incentives, liquidity, his own exit decisions and family. His forecasts and recollections are his own and are not independently verified.

Ehrenberg left a Wall Street career that included derivatives desks and leadership of DB Advisors. He recalls a period when money seemed unusually easy to make, but internal competition for it made the culture corrosive. His learning curve had flattened, prompting him to spend years exploring early-stage technology investing.

That exploration led him toward concentrated seed investments in data infrastructure. He says his later departure from IA coincided with a venture-market peak, although he does not claim he deliberately timed it. He sees an intersection between market conditions and his own desire for a new challenge.

Stebbings cites Doug Leone’s description of venture becoming a commoditized, lower-margin business. Ehrenberg disagrees with the blanket characterization, while expecting returns to compress if invested capital grows faster than aggregate exits. More capital in the denominator does not automatically create proportionately more successful outcomes.

He sees a barbell: large, multistage investment platforms at one end and small firms helping founders form companies and find product-market fit at the other. In his view mid- and late-stage investing may resemble asset management, but incubation and seed retain a distinct, hands-on character.

Stebbings asks how boutiques can compete with large firms offering large checks at high pre-product valuations. Ehrenberg says crowded themes come in cycles. If he were investing in pure technology today, he would spend almost no time on pure AI and look instead for large opportunities receiving less attention; this is his strategy preference, not a prediction that AI companies will fail.

He thinks the larger supply of venture capital is structural, not merely cyclical. Sovereign funds and very wealthy family offices now seek places to allocate capital, while platforms such as Andreessen Horowitz have built a range of products for large institutions. He credits that strategic insight without equating platform scale with early-stage investing skill.

Ehrenberg argues that the most hands-on early-stage venture model cannot readily scale, making the best small funds hard for many LPs to access. A limited allocation can still contribute to a diversified portfolio if returns are strong. He expects large institutional capital sources to remain active in the asset class.

On fees, he expects a continuum resembling hedge funds: differentiated managers with strong net performance may command premiums, while large, later-stage asset-gathering strategies face fee compression. He cites Sequoia and hedge-fund examples as illustrations, not a guarantee that any firm will outperform after fees.

He notes that some hedge funds vary fees with lockup length, whereas venture capital is generally illiquid for a long time. Later-stage strategies may justify lower fees because the assets and funds tend to be larger and the expected holding period and work can differ. His fee trajectory is a forecast.

Stebbings describes LP employees who prioritize access to prestigious names and career security because results may arrive after they leave. Ehrenberg calls traditional LP incentives broken and argues that some allocators enabled both a proliferation of firms and continued fundraising by established managers without sufficient distributions.

He believes larger sovereign investors will put more emphasis on net returns and fair fees, though their scale also favors managers able to deploy very large pools. This is his generalization about incentives, not evidence of every allocator’s behavior. Both speakers have interests as fund managers.

Asked whether new LPs will disappear in a downturn, Ehrenberg sees corporate investors as particularly cyclical, subject to management changes and shifting priorities. He expects sovereign funds and major pools of private wealth to remain allocated over time, while replacing individual managers that disappoint.

How should an endowment incentivize its staff? Ehrenberg says a public-benefit institution may struggle to compete with private-sector pay. In his experience, people join for learning, colleagues and a mission. He praises the University of Notre Dame investment office as an example of a committed, long-term culture; this is his assessment.

Despite venture’s long lockups, Ehrenberg would still invest in it as part of a diversified portfolio. He invokes David Swensen’s long-horizon approach at Yale, while stressing that liquidity needs differ. A smaller allocation, such as 5% to 7% in his illustration, can be left to compound without making the entire portfolio depend on timely exits.

Stebbings cautions that institutions cannot simply copy Yale’s historical allocation and expect the same returns: entry conditions and manager selection have changed. Ehrenberg agrees that the principle of patient capital does not guarantee historical results. Larger, more institutional strategies may have different return and volatility profiles.

Ehrenberg suggests that a hypothetical risk-adjusted 12% to 15% return could be attractive, while below 10% may not adequately compensate for the risk. He and Stebbings discuss an illiquidity premium relative to liquid alternatives. These are illustrative judgments, not promises or advice tailored to a particular investor.

With IPO and acquisition liquidity limited at the time of the interview, Ehrenberg sees continuation funds as a possible source of cash. New investors could buy into an existing portfolio at a negotiated valuation, offering an exit to LPs who need liquidity while retaining exposure for others. He cites transactions involving established firms as examples.

He does not know whether continuation funds can scale across the whole industry, but thinks a $50 million to $100 million vehicle might be feasible for a suitable portfolio. Later-stage assets may be easier to price. The approach depends on buyers, sellers and the quality of the underlying assets, not simply on needing cash.

Stebbings raises a conflict over pricing. Ehrenberg describes a process in which an outside firm values the portfolio and an incoming investor and existing parties negotiate around that valuation. Existing sellers generally want a higher price and buyers a lower entry basis; independent valuation helps inform negotiations but does not eliminate conflicts.

On private-book valuations, Ehrenberg says the answer depends on the manager and notes he is no longer closely involved with every firm. As an LP in many funds, he suspects marks have adjusted downward slowly and tend to lag public markets in both directions. This is an observation, not a portfolio-by-portfolio audit.

He sees a tension between managers under pressure to return capital and buyers seeking attractive entry prices. If he were running a continuation strategy, he would focus on relatively young firms with promising portfolios and little distributed capital, whose companies matured just as exit markets became difficult. That is a hypothetical selection strategy.

Ehrenberg distinguishes preparing for an IPO from selling privately. At IA, he says, the team would start planning roughly two years before a potential listing, addressing legal, compliance, organization and board readiness. Once prepared, a company can choose an appropriate market window rather than begin the work at the last minute.

Private secondary decisions are harder. Looking back at highly priced private companies, he suggests examining whether a business is genuinely close to public-market readiness. Even an investor who believes in its future might sell a modest part of a position when valuation and actual maturity appear far apart.

IA sold a portion of its Wise holding through an employee tender before the listing. Ehrenberg recalls a large position, a price the firm considered fair, and a desire to return money and recycle capital. The process also provided employee liquidity and brought later-stage investors onto the capitalization table.

He says the Wise sale returned roughly half of IA’s $105 million second fund and generated recyclable capital. In the first fund, the sale of Simple to BBVA produced liquidity that was subsequently invested in The Trade Desk’s Series B. He credits the timing of the Simple sale in part to luck.

Stebbings worries fewer small acquisitions make recycling harder for early-stage funds. Ehrenberg agrees it can be difficult to fund follow-on opportunities after initial capital is deployed and fees are reserved. IA avoided solving the problem with special-purpose vehicles and instead relied on available sales, including the Wise secondary.

Deciding whether to distribute or hold public shares was one of the hardest questions for Ehrenberg and his partners. The Trade Desk was IA’s first major IPO and a defining result for its first fund. They sold in two public secondary offerings and then distributed shares over approximately 18 months.

He recalls The Trade Desk entering the public market at roughly a $700 million valuation and an average distribution valuation around $2.5 billion. He estimates the position returned five to six times the approximately $50 million first fund net. The transcript contains imprecise figures, so those estimates should not be treated as an audited fund statement.

The shares rose further after IA distributed them. Ehrenberg says he personally held shares for a long time, as did some LPs, and those holders earned more; that later experience is separate from the fund-level distribution result. With later IPOs including Datadog, Wise and DigitalOcean, he says IA distributed shares more gradually.

He does not regret the earlier Trade Desk decision. The team weighed upside against the danger that markets could fall before a defining result was secured. A different stage of the firm’s development might have led to a different choice, but he judges the decision by the context and reasoning available at the time.

A first IPO mattered both to the market’s perception and to the team’s confidence, he says. IA already had promising holdings and respect among peers, but a major realized outcome gave its thesis objective validation. He recalls owning around 17% of The Trade Desk at IPO and estimates an approximately $5.2 million investment produced around $250 million to $300 million net distributed proceeds.

Ehrenberg met founder Jeff Green before IA’s first fund was established. He recalls co-leading the seed round with Founder Collective on the basis of an early presentation and bridging the company several times before its Series A. His account is shaped by his own financial interest in and role at the company.

Do wealthy investors make better liquidity decisions? Ehrenberg reframes the question: the first major exit proved the firm could return substantial capital to LPs. That validation gave the partners more confidence and flexibility to decide how to manage future public positions; he does not claim wealth automatically improves judgment.

Stebbings asks about the opposite danger: overconfidence after success. Ehrenberg credits candid discussion among partners and mentors, intellectual rigor and an acknowledgment of luck. For solo managers, he suggests trusted mentors can provide some of the challenge and support a partnership offers.

He separates a well-reasoned decision from its eventual outcome. Missing an investment, failing to sell before a decline, or distributing before a further rally can all be painful. His approach is to discuss those outcomes honestly and learn, rather than rewrite the original decision with perfect hindsight.

Success can give a firm better access to founders and capital, Ehrenberg says, but venture remains difficult and still requires persistent effort. He says his own motivation is not primarily financial: he enjoys work, building companies and collaborating with founders. This is his account of his circumstances.

He recalls a $320,000 bonus on a $95,000 base salary at Citi in his late twenties as a first meaningful financial turning point. Beyond the amount, it gave him a durable feeling that his work and skills were valued. The figures and emotional response are his recollection.

Around five years later at Deutsche Bank, he says, a $6 million bonus plus a special equity award surprised him again. When he and his wife Karen married, they had student debt and little money; he still finds the trajectory difficult to comprehend and describes gratitude rather than inevitability.

He hopes for further meaningful milestones, perhaps from a seed investment or economic-development work in Detroit. Although wealth provides security and has allowed investments in sports teams and property, he says it has not fundamentally changed his motivation, his marriage or his desire to learn.

Raising children amid abundance is difficult, Ehrenberg says. He and Karen tried to model hard work, humility, care for others and community investment rather than only talk about them. He says he prioritized attending birthdays, performances and sports, and credits his wife’s flexibility and involvement in family life.

The conversation about values continues even though their sons are adults. Ehrenberg says he and Karen waited until they felt ready to have children and made family a priority. He describes what worked for their family, rather than offering a guaranteed formula for raising ambitious children.

His marriage advice begins with choosing battles: some irritating habits are not worth a confrontation. He says disagreements should not be framed as winning against a partner. When emotions run high, pausing and returning to a hard conversation later can prevent words meant to hurt from doing lasting damage.

In quick fire, Ehrenberg says returning to seed investing reminded him that he loves the work. He sees room to improve the management of sports teams and expects institutional money to push prices higher and return expectations lower. He has investments in sports teams, so his forecast also concerns assets in which he has an interest.

He values the ability to withstand short-term pain while allowing a long-term thesis to develop. Asked in 2024 about IPOs, he predicted early signs of recovery in 2025 and a stronger reopening in 2026. He also expected a different US antitrust leadership under a hypothetical Trump administration to change the acquisition environment; these were forward-looking opinions at the time.

Asked where he is strongest as an investor, he says helping portfolio companies win now takes more of his energy than sourcing new opportunities. For managers raising capital, he recommends a distinctive, deeply held thesis and the willingness to take risk rather than follow the crowd.

Ehrenberg believes outstanding founders are independent but can benefit from good investors as sounding boards and sources of empathy in difficult early stages. He cannot substantiate the suggested claim that 90% of VCs destroy value, but thinks investors who overestimate their contribution and lack humility can harm companies.

In ten years he hopes his sons will run more of the family business while he serves as chair. Alongside venture and sports, he describes investments in real estate, affordable workforce housing, food and drink, and Detroit’s development. These are interests and aspirations he disclosed in the interview, not predictions of their results.