      SaaStr · 2015-06-10
      · 4012d
    

The Mathematical Reality: Why Only 6-12% of VC Partners Achieve True Success

Jason Lemkin analyzes why venture capital success is extremely rare, demonstrating through mathematical models that only 6-12% of VC partners can be considered truly successful. The analysis shows that top-quartile VC firms achieve 20% IRR and 2x returns net of fees, but returns are highly concentrated among 1-2 partners per firm, making individual partner success even rarer than firm-level success.

10 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Cash Multiple Return

2x

net of fees

Top quartile VC funds

Internal Rate of Return

20%

median

Top quartile VC funds since Web 1.0

Overall Successful VC Partners

6-12%

range

Total percentage of VC partners considered truly successful

Pre-IPO Return Target

3x

hopeful multiple

VC return expectations for late-stage investments

Private Equity IRR Target

20%

minimum acceptable

Competitive return threshold for LP allocation decisions

Private Equity Liquidity Timeline

2-5years

range

Path to liquidity for PE investments versus VC

Seed-Series A Return Target

100x

hopeful multiple

VC return expectations for early-stage investments

Series B-C Return Target

10x

hopeful multiple

VC return expectations for growth-stage investments

Successful Partners Within Top Firms

33%

approximately 1/3

Partners driving good returns at top-performing VC firms

Successful VC Firms

15-20%

range

Percentage of VC firms with returns merit next fund