Dear SaaStr: How Big of a Return Are VCs Looking For in a Startup?

Dear SaaStr: How Big of a Return Are VCs Looking For in a Startup?

• For Angel, Pre-Seed: At least 50x, with a possible chance of more.  The loss rate in general is so high here, the winners have to do 50x.  And this is after dilution, so 100x from the valuation at initial investment.
• For Seed to Series C or so: At least 10x, with a possible chance of that same 50x-100x.
• For Growth Stage: At least 3x, with a real chance at 10x if everything goes well.

Top results for a VC fund itself is 3x-4x for strong funds. 8x for the handful of crazy good funds.

3x “net” (of fees and costs) is pretty darn solid, though for the fund overall — the cumulative returns of all the investments (usually 15–40) in a given fund.

To make up for the losers, the failures, and the half-successes …. the winners need to do 10x-15x, minimum.  Often really more than that, 30x-100x to return the fund.

So if the VCs don’t “see” the chance of 10x and more, they’ll pass on investing. No matter the other positive attributes.