8. Passion & vision (ideas)
are not enough!
Flat & Down Founder
Rounds Ownership
Series C
Series A
41%
37%
Series B
21%
Series A
Series C
14%
10%
Dow Jones Venture Deal Report 2007 Dow Jones Venture Deal Report 2007
9. 90% of new products fail
New Product Failure
Harvard Business Review
July 1, 2004
10%
90%
10. You won’t make any money!
Venture Returns Profile 1990-2006
468 Investments $1,305 MM Cost / $3,338 MM Value = 2.56x
Bill Sahlman, Harvard Business School
% of Cost
63.2% 61.7%
% of Value
4%
20.5%
13.6%
11.6%
9.2%
8.7%
4.3%
3.8% 3.3%
<1x 1x to 3x 3x to 6x 6x to 10x >10x
11. It’s really even worse!!
20-year VC IRR
5 points of the 20
20.0% are from one
company in one
venture fund!!
5.0%
http://www.techcrunch.com/2008/11/12/a-scary-line-has-been-crossed-for-vcs/
12. Without a 10x hit,
venture returns are negative!
Based on Sahlamn HBS data 1990-2006,
Analyzed with 3 year investment, 7 year returns
-1%
13. How much is your idea worth?
Product Failure: 90%
Equity Stake: 10%
Returns Driver: 4%
Venture IRR: 5%
0% = $0!