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Even if the peak for non-VC was raised, it would still be too simplistic. This is probably more like what the probability distribution looks like: http://www.da
by zhyder 18y ago
Even if the peak for non-VC was raised, it would still be too simplistic. This is probably more like what the probability distribution looks like:
http://www.dabbleboard.com/main/public?created=dummy8&myid=4 http://www.dabbleboard.com/main/public?created=dummy8&my...
VC is characterized by large probability spike at $0 and 0 probability at intermediate valuations. Non-VC (i.e. what founders typically want) is closer to a single-mode normal distribution.
Though Matt's point (and his graph) about mean and variance are correct: VCs -unlike founders- only care about mean because they can diversify with a large number of startups.
- mattmaroon 18y agoYour graph is probably closer than mine, but the odds of a 1x return aren't 0 at all. I think Fred Wilson said the odds of a mediocre return are like 1/3. VCs abandon ship when it looks to be the correct play just like anyone else.
- zhyder 18y agoIMO abandon ship == near-$0 valuation. Although I didn't know about the 1/3 odds of a mediocre return (defined as 1x?) for VCs. The main point of my (admittedly still simplistic) graph was that the VC probability distribution is bi-modal.
- mattmaroon 18y agoI would assume mediocre meaning something like 5.x-2x or something. I don't remember exactly, but I definitely know that startups that fail are often sold and VCs get some money back. And some that didn't fail but didn't really succeed and don't appear to have much potential sell for not a lot either.