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Vrishank
Startups/VC/tech • 1y
Pareto Principal or the 80/20 rule in the world of Venture Capital 👇 For those aware who are not aware of this 80/20 rule, it states that 80 percent of the returns will be generated by 20 percent of the companies in the portfolio. This is a pretty standard result in the VC industry where most of the returns are generated by only a few investments. Let's see the application of this principle on an Indian VC firm, known as "Blume Ventures". 👇 - For Blume Fund 1, the top 20 percent of the companies in their portfolio generated 98 percent of their total returns 🤯 - The total fund size was Rs.114 crore, their portfolio company GreyOrange alone returned them Rs.170 crore 🫡 - The top 20 percent companies in their portfolio generated them an avg of 16.5x return - 50 percent of the companies in their portfolio made them no return. This is why VC is often called the most high risk, high reward industry. The chances of your portfolio company failing is always high.
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