What is a Good Venture Return?

Here’s a good post by A VC, Fred Wilson, of Union Square Ventures on what constitutes a good VC return. For all the aspiring VCs pondering the question he says:

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.

If you do the math with that batting average, and assume the return is 1.5x on the middle third, then you need to average 7.5x on the 1/3 of the investments that make the bulk of the returns.

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