Hey, I'm Dan! I invest in startups at Madrona and write the DL, a weekly newsletter about tech in the Pacific Northwest

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How much money do VCs make? 💸

Last week, Version One, an early-stage VC based in Vancouver and SF, published a great blog post on the returns to-date for their first fund, a $15M fund raised in 2012.


The fund invested in 20 companies over two and a half years, and you can see the multiple on invested capital for each portfolio company as a point on the chart above (current asset value divided by total invested capital).


Here are some of the takeaways from their post:

  • Startups are hard. One-third of portfolio companies did not return any capital, and the second third returned <1x the capital invested
  • But in the last third, one company generated a 48x return, and there are another 3 potential “fund makers” that could pay back the entire fund by themselves
  • Because of those fund makers, Version One is confident their fund will end up returning at least 4x on invested capital, as unrealized returns turn into ‘real’ returns over the next few years


A 4x+ return on a fund is awesome. An AngelList analysis showed that writing a check into every AngelList investment would give you a “market return” of ~1.7x (before fees). In reality, however, only one-third of managers are able to outperform the market return because returns are not normally distributed, and averages skew much higher than the median.


If you want to learn more about Version One, they put together super high-quality research on the markets and themes where they invest. Check out their guides to marketplaces, social platforms, and digital healthcare. Oh yeah, and they’re hiring!


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