Venture capital returns

100000%

no joke

So you're telling me if someone is pitching a business to a VC it should have a 100,000% return or they'll be kicked out of the room?

Dear God, you are gullible. Go check wikipedia. I would assume it needs a 20-25% return (PE requires that), but since this is VC and there is considerable more risk it mighe be higher.

When pitching a business to a VC you should definitely have a 100,000% return because VCs will automatically slash 3 zeros off to 100%.

Gekko21:

Dear God, you are gullible. Go check wikipedia. I would assume it needs a 20-25% return (PE requires that), but since this is VC and there is considerable more risk it mighe be higher.

I wasn't confirming what he said dip shit.

My question is to people who work in VC, or maybe just work at all, and not at Abercrombie.

As a VC investor, what is the return you would look for in a project?

I'm not asking what a PE investor looks for, although your knowledge is impossible to come by elsewhere, so thanks for that.

Well half kidding. Some firms typically don't want safe low returns -- they want the next potential googles and as long as one of them makes it, they're golden.

Typically 10x your initial investment is norm.

I know the vast majority of VC is in IT/BioTech... where 10x returns are not at all outside the realm of possibility.... but is this also the case with brick and mortar VC investments?

IRR of at least 40% typically (double a PE firm's hurdle of 20% due to added risk, etc.)

It depends on the stage of the investment. Early stage or angel investors look for much higher returns... the last early stage deal I saw was looking for a 45x return (they don't use percentages in VC btw). 10x is nothing in VC... at least where I am.

Those are probably levered returns. They get x10 levered. Actual return on assets is lower.

Venture returns as a whole have actually been negative over the last ten years.

it totally depends on the stage of investment. i don't think VC's think of it as IRR. they think in terms of times money. a seed stage and early stage investor will look for significant returns (e.g. over 10x money) whereas a late stage / growth equity investor could be looking for ~3x money. it totally depends on the type of investment, transaction structure, nature of the company, etc.

50% gross IRR which equates to ~35% IRR net of fees for growth equity/venture investments is what I've seen from multiple fund profiles.

IRR is useless in this debate, multiples are all that matter. In the vast majority of VC funds there will be 15 investments, 8 will return 0.0x, 5 will return 0.8x, 1 will return 2.5x and 1 will return 12x.

An investment will only be made where the manager thinks there is potential to earn 10x, even greater in early stage venture.

The PE shop I work at looks for ~30% returns on top of the fees it charges clients, so around mid to upper 30s IRR. VC tends to be around 10% higher.

I have heard similar things to the last poster, but that in VC, a PM will look for 25 companies, with 20 losing money, 4 having reasonable returns and 1 making a killing.

Depends on the stage.

A good approximate for the returns VC's chase: Seed: ~100x + Early: At least 10x Growth: At least 3x etc.

Seed investors invest in the dream. Series A VC's invest considering the traction + the dream. Series B onwards investments become more finance and numbers-driven.

The earlier the stage, the higher the multiple is sought just from a simple risk-return mentality.