Why the date of a return matters as much as the multiple

A return multiple is easy to understand: compare what comes back with what went in. Time adds another dimension. An investment that doubles over two years has a different annualised outcome from one that doubles over six years, even though both show the same two-times multiple.

For a simple investment with one payment at the start and one receipt at the end, doubling over two years corresponds to approximately 41.4% annualised growth. Doubling over six years corresponds to approximately 12.2%. These are hypothetical mathematical examples, before costs and tax, and are not Bolt targets.

Real venture cash flows can be more complicated. A transaction may pay part of the consideration at completion and another part later. The partnership may retain funds for liabilities or future needs. Investors can also receive more than one distribution. A dated cash-flow calculation is needed to represent those circumstances properly.

CUDO’s option economics can include deferred buyback consideration. A portfolio realisation does not necessarily mean all associated cash reaches the partnership on the same date. Receipt by the partnership and distribution to members are separate events.

The LLP agreement also provides for the determination of a prudent interim payment after relevant income is received and profit realised. That is not a promise that all gross proceeds will be distributed immediately. Costs, reserves and the governing terms remain part of the calculation.

Annualised returns require dated cash flows, including the investment price, receipts and deductions. A target multiple alone cannot establish an annualised outcome. Clear timing helps investors evaluate the opportunity and plan around its illiquid nature.