Venture capital (VC) investment outcomes reveal that over 50% of VC investments fail to return capital, with only 25 to 30 companies globally each year generating more than half of the total VC exit value. Additionally, more than 90% of funds that achieve a threefold or greater return rely on a single company to deliver the entire fund's returns. Startup failure rates remain high, with approximately 90% of startups failing overall. Industry commentary suggests that beyond the inherent challenges and randomness of startups, a substantial factor contributing to failure is the prevalent misalignment in understanding value among entrepreneurs and investors. This misperception of value models is considered a notable cause of startup underperformance and failure.
People take it as collective wisdom that most startups fail because startups are just hard and somewhat random, but a non trivial part of it is just that most people, especially smart people, have the wrong mental model for value. https://t.co/yuAav5oKra
1) The last 5% is the hardest to write, especially when you didn’t write the first 95%. 2) 99% of these startups are ngmi. https://t.co/6dGclOifmd
1) The last 5% is hardest to write, especially if you didn’t write the first 95%. 3) More than 95% of these startups are ngmi https://t.co/6dGclOifmd