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Comment by staticautomatic | Hacker News Reader

If you don't make enough money when every single one of your portfolio companies exits for $50M, then you're doing it wrong.

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That is a horribly naive analysis. Did you even read the article? $50M can be a great outcome or a terrible one depending on the circumstances. What valuation did you buy in at? If you bought in at $100M, a $50M exit means a 50% loss. How much time did it take to exit? A 50% return after 1 year is a very different outcome from a 50% return after 10 years.

actually, read the post - the point isn't about ROI, but absolute dollars. A VC (human) can't do 25 deals because they can't sit on that many boards.

First: yes you /can/

Second: you don't /have/ to have a /personal/ board seat

Third: funds typically have multiple partners

If there is one lead and five follows in a series A, do you really think there are six new board seats created?

I take issue with the model, not the math.

If you invest $10M in a company and get back $12.5M after ten years, that's a 2.3% annual compound return.

You would have made nearly twice as much (with virtually no risk) if you had bought a government bond with the money instead.

I agree with your point, but you are vastly overstating the return on government bonds. Current yield on the 30 year is 2.31% and everything with a shorter maturity is way less than that.

Sorry, I should have been more specific. A VC fund started in 2006 would have gotten around 4.5% return on a 10 year bond.

You're right about current yields, but they're also at all-time historical lows right now.

10 year tbill yield is 1.5%

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