I've been trying to understand the very basics of venture capital, as a relative finance-illiterate. Some stuff I've learned from looking at return on investment numbers:
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Returns are a power law Make 20 bets 10 go to zero 5 return 1-2x 3 return 3-5x 1-2 return 10-100x or more That’s the rough assumption at least What really matters is the magnitutude of your greatest successes, not your failure rate
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For established tier 1 VCs with a track record, that’s how they think BUT reality ain’t that simple for everyone else New partners at middling or struggling funds might actually care more about not looking stupid to their partners & investing in something crazy
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Depending on what you’re building, VC responses will be all over the place in the early stages but in general, the really good VCs are looking for things that can become truly gigantic As
@sequoia puts it, “epic companies” Facebook. Google. Amazon. Uber.Thanks. Twitter will use this to make your timeline better. UndoUndo
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