Quick update here. The data I site below is from Foundry LP StepStone. Since my original post I’ve confirmed with them that they’re ok with my identifying them as the source of the data. And they’ve offered to help me play with the raw data of a future report – I’ll work on some interesting updates here soon! Yesterday’s post on venture outcomes – Venture Outcomes are Even More Skewed Than You Think – generated lot of traffic. Clearly, it’s interesting to put real data against a heuristic and see how reality maps to our expectations. As I pointed out in my post, the data set from Correlation Ventures I was working with had some limitations. For starters, I didn’t…
Tag
venture economics
Venture Outcomes are Even More Skewed Than You Think
The typical “successful” venture portfolio is often described as having the following outcome: 1/3 of companies fail 1/3 of companies return capital (or make a small amount of money) 1/3 of companies do well Fred Wilson, for example, described this a few years ago: I’ve said many times on this blog that our target batting average is “1/3, 1/3, 1/3” which means that we expect to lose our entire investment on 1/3 of our investments, we expect to get our money back (or maybe make a small return) on 1/3 of our investments, and we expect to generate the bulk of our returns on 1/3 of our investments. It’s a generalization but one that’s pretty well accepted in venture circles and…