#179 VC PortCo Mortality Rates

Only the Strong Survive

Author

Doug Dyer
September 12, 2024

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VC Portfolio Co. Survival Rates - Only the Strong Survive

Earlier this week I was meeting with a longtime friend and LP in venture capital. He asked the following question: what is your portfolio company survival rate and how does it compare to others in the industry?

I answered the question but wasn’t 100% sure about the rest of the industry. Luckily there was a lot of chatter on this in the VC Twitter and Blogosphere already! After doing some research, I wanted to share a few of my favorites on the topic. Enjoy!

More from Fred Wilson earlier this week on Startup Mortality Rates: “I have always said this, on my blog and in person, about what we have seen at USV and what I have seen in other early stage venture funds I've worked on and invested in:

  • 1/3 are good investments

  • 1/3 turn into something but you wish you hadn't made the investment

  • 1/3 are zeros

Another friend of mine asked me a similar question via email this week and pointed me to something out of Nate Silver's book, On the Edge.  Nate breaks down risk in data driven ways and uses as examples poker, venture capital, crypto, etc.  The book quotes some figures from Marc Andreessen wherein he outlines that a16z's funds perform as follows (note: he also broadly says these are 'top decile' fund performance numbers, too): 

  • 25% of investments make zero return (i.e. 100% write offs)

  • 25% produce a return greater than zero but less than 1x (i.e. are losses)

  • 25% produce a return between 1x-3x

  • 15% produce a return between 3x-10x

  • 10% produce a return of 10x or greater

If you bucket the first two as "zeros" or near zeros, the third one as "something you wish you hadn't invested in" and the last two as good investments, you get to roughly the same 1/3, 1/3, 1/3 that I like to use.”

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