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It is not a vanity metric.

These points describe a different problem - that you can't condense something complicated like a fund down to a single number, so you shouldn't view IRR in isolation. I suspect (hope) people sticking money into VC funds are sophisticated to know that though.

This isn't unique to IRR. If you stock pick looking only at P/E ratios you're gonna have a bad time too




This is right. That's why you should not only be looking at IRR but also multiple of money returned (MoM or MOIC). When you saw a couple of private equity fund presentations (of which VC is just one subset), you will better understand what the differences are and how this affects your potential investment as a limited partner in such a fund.

But let's also not forget that in many cases these funds are driven by their investors to focus on IRR. Many times these funds do not cater towards retail investors. The problem is therefore coming from the institutional side where people seem to be pushing these metrics.




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