Venture Capital Returns
At a recent event was recently asked about investment outcomes for venture capitalists. I didn’t have any recent data, so I said that VCs generally expect that 1/3 of their investments will see great returns, 1/3 will see modest or no returns, and 1/3 will not be profitable.
VC Fred Wilson as Union Square Ventures recently analyzed his career in venture capital and posted his results. He’s got an enviable record of only 20% of deals failing to deliver, and more than 1/3 delivering a greater than 5x return.
Fred’s not into biotech, so I’d be hesitant about applying these numbers to biotechnology investing, and I’d be interested to see what the trends are in biotech VC.
There are some VC’s that are more successful than others and much of it depends on their talents in selecting the right company to invest in. I found that VC’s who specialize in a certain industry or field by far get better returns, and I’m sure biotech is one of them. Venture capitalists that just look for the so-called ‘best’ opportunities rather than the most promising associated with their specialty are risk takers for sure but not necessarily the most successful.
I do agree with you Yali. I found that a good market research is one of the best strategies to be followed by a Successful VC’s.