Community StoriesN2 Insider

💡 So only 20 VC firms capture 95% of VC profits 🤷🏼‍♂️

Derek Watson
Derek Watson
N2 Blog

Share this article!

Share on email
Share on linkedin
Share on twitter
Share on whatsapp
Share on telegram
Share on facebook

What Is FinTech? The Basics

💡 So only 20 VC firms capture 95% of VC profits according to this Forbes article 🤷🏼‍♂️.

Considering Forbes’ reputation for insightful startup scene predictions, I wonder if this will cause a run for these top 20 firms 😀
➡️ The main takeaways from the article are:
1. Home runs are crucial for VC returns. Since VCs fail in about 80% of their investments, they need to invest in a few highly profitable ventures to generate substantial returns. 👏🏼
2. The top 20 VCs invest in potential home runs by focusing on Silicon Valley, where most unicorn-entrepreneurs are located, and investing at the optimal stage of a venture’s development.
3. VC-based ecosystems outside Silicon Valley struggle to achieve high returns because they lack home-run ventures that can go public and have to rely on strategic sales, which rarely offer significant returns.
4. Entrepreneurial ecosystems outside Silicon Valley need more unicorn-entrepreneurs who can start and launch highly successful ventures without relying on VC funding.
5. Areas starting VC funds should focus on developing unicorn-entrepreneur-based ecosystems for sustained success.
👀 As a sum up it says, VC firms outside Silicon Valley should focus on building entrepreneurial ecosystems and developing unicorn-entrepreneurs who can grow more with less. They should adopt a guerilla-style approach to compete with the dominant players in the industry.
📣 Interesting article in how unimaginative and convoluted it is, in essence saying the VC model is super limited and all about chasing unicorns and new ecosystems should copy it but add a slice of local lemon.
* FYI the refs cited in the article are from 2014 and 2012, so good that it is up to date super relevant.
Forbes Article

Planning your fundraise? 

Get Matched

Sign up now and get the latest updates on investor preferences and access to our fundraise toolbox, full of helpful tips

We care about protecting your data. Here's our Privacy Policy