Higher-Return Golden Visa Fund Options

Critical Caveat: Projections Are Not Promises
When a fund advertises "15% target IRR," this is a projection—not a guarantee. Many venture capital and PE funds fail to meet their targets. Some significantly underperform. Some lose principal.

What Target IRR Means:

• It's what the manager hopes to achieve
• Based on assumptions about portfolio performance
• Historical performance of similar strategies
• Does NOT account for your specific investment timing

Why Projections Can Be Misleading:

• Survivorship bias: Failed funds aren't in the data
• Vintage year matters: Market conditions at investment affect returns
• J-curve effect: Returns may be negative early before improving
• Exit timing: Actual returns depend on exit conditions

The Honest Truth:
A fund targeting 15% IRR might deliver 20%—or it might deliver -5%. High targets mean high variance in both directions.

Venture Capital Funds

• Target IRR: 15%+ often claimed
• Strategy: Early-stage company investments
• Risk: Very high—many portfolio companies fail
• Timeline: 10+ years typical
• Best for: Investors who can truly afford significant loss

Growth Private Equity

• Target IRR: 10-15%
• Strategy: Growth-stage companies with proven models
• Risk: High, but less than pure VC
• Timeline: 7-10 years typical
• Best for: Investors seeking growth with some track record backing

Sector-Specific High-Growth Funds

• Target IRR: 10-15%+ depending on sector
• Strategy: Concentrated in high-growth sectors (tech, biotech, renewables)
• Risk: Sector concentration adds another risk dimension
• Timeline: Varies by fund structure
• Best for: Investors with sector conviction

Opportunistic PE Funds

• Target IRR: 12-18% in some cases
• Strategy: Distressed assets, turnarounds, special situations
• Risk: High complexity and execution risk
• Timeline: 5-10 years
• Best for: Sophisticated investors who understand the strategies

Questions to Ask:

1. What's the manager's actual track record?

   • Not projected returns—realized returns
   • On similar strategies, not different fund types
   • Net of all fees, not gross returns

2. How many funds has this manager run?

   • First-time funds have higher uncertainty
   • Track record on predecessor funds matters

3. What's the J-curve expectation?

   • When will returns turn positive?
   • How much negative performance early?

4. What's the exit strategy?

   • How will the fund realize returns?
   • IPO? Trade sale? Secondary?
   • What market conditions are required?

5. What's the portfolio construction?

   • How many investments?
   • Concentration in any single company?
   • What if the biggest bet fails?

Red Flags:

• Unwillingness to discuss past performance
• Only presenting best-case scenarios
• Pressure to invest quickly
• Vague answers about exit strategies

What Could Go Wrong:

• Total Loss Scenarios: Early-stage VC investments can go to zero. Even diversified VC portfolios can significantly underperform.

• Extended Lock-ups: VC exits often take longer than projected. Your 10-year fund might become a 12-year fund.

• Illiquidity: You cannot exit early if things go wrong. You're along for the ride.

• Manager Risk: If the key people leave, the strategy may suffer.

• Market Timing: Your return depends heavily on market conditions at exit, which you can't control.

Historical Context:
Venture capital as an asset class has delivered strong returns over long periods—but with enormous variance. Top-quartile funds outperform; bottom-quartile funds often lose money. You don't know which you're in until years later.

The Honest Question:
If your fund lost 40% of its value, would you be financially and emotionally okay? If not, these funds aren't appropriate regardless of return potential.

Appropriate For:

• Investors for whom €500,000 is truly discretionary (not needed for retirement/security)
• Those with 10+ year investment horizons
• High net worth individuals with diversified portfolios
• Investors who have experienced volatility before and didn't panic
• Those who genuinely understand and accept the risks

Not Appropriate For:

• Investors who would be significantly impacted by loss
• Those nearing retirement or needing the capital
• First-time investors unfamiliar with alternative assets
• Anyone choosing based primarily on projected returns (rather than risk tolerance)
• Investors who say they're comfortable with risk but have never been tested

The €500,000 Test:
If losing €200,000 of this investment would change your life plans, high-return funds are likely inappropriate—no matter how comfortable you feel with risk in theory.