I have never had a Unicorn
But I still manage to get better returns than the majority.
It seems that the VC mantra in the age of cheap 💵 had become concentrated on: power law, fomo, homeruns, hyperscaling - All to achieve the elusive 🦄 valuation status and great paper returns.
Statistically, very few funds give venture type returns of 25 to 35%
65% don't manage to return the fund
23% return between 1 and 5x
12% manage to return to return >5x
There have been many debates around if a VC fund needs to look at each investment as 100x opportunity so that they can hit their return targets, or if there is a model that can look through a different lens, one based on startups that make real money, consistently, and grow in size and earnings over time. The big question that comes up is around selection, is it really any easier to select #founders that are not aiming to be world changers and industry dominators?
➡️ I looked back over my investments, 2004 to 2020, excluding businesses that I founded, and this is how it looks >>>
16 years
3x Cash on Cash return
19% annual ROI
When I dig into the diversification of investments which includes 🏥 Healthtech, 🌾 Agritech, 🛍 Ecommerce, 🏪 Marketplaces and do some pattern searching, there are some common points that give me the confidence to say that consistent VC type returns are achievable without massive home runs. Mind you your 📲 social media accounts and website won't be as sexy without the Unicorn announcements.
➡️ So here is the common denominator across all of the portfolio companies
✅ practically every founder was non-technical
✅ practically every founder was an absolute domain expert.
💡 They were all solving problems with inside knowledge
💡 They all had a community inside their industry
Hybrid data driven venture funds that add deep value to founders are on the horizon, looking forward to accelerated innovation and funding.
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