Venture Capital Return Calculator
VC fund returns.
Calculate venture capital fund expected returns using power-law distribution. Enter fund size to see using failure rate and average winner multiple.
What this tool does
This tool models VC fund returns by estimating how many deals succeed based on a failure rate assumption, then calculating their combined value using an average winner multiple. The result shows total fund value at exit, based on your fund size, number of deals, individual check size, expected failure rate, and average return multiple per successful investment. The failure rate and winner multiple are the primary drivers of the outcome. A typical scenario might involve a fund making 50 deals at a given check size, expecting 30% to fail, with survivors returning 5x capital on average. The calculation assumes all winners exit simultaneously at the modelled multiple and does not account for follow-on investments, dilution, time-value adjustments, fees, or actual market conditions. Results are for illustration only.
Quick answer: with the default values, the result is 16.99% (Expected Annualised Return). Adjust the values below for your own figures.
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Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Venture capital fund return calculator models power-law distribution: most investments fail (60-80%), few winners drive all returns. 20M fund, 20 deals × 1M average. 70% failure rate = 14 losses (zero), 6 winners at 10x average = 60M from winners. Total return: 60M / 20M = 3x MOIC. IRR over 7 years: 17%.
Example: 20 deals, 70% failure rate, average winner returns 10x. Winners: 6. Each invested 1M returns 10M = 60M total. Fund deployed 20M. MOIC = 3x. Over 7 years (typical hold period): IRR = (3)^(1/7) - 1 = 17%. After fees (2-and-20): net IRR ~12-14%. Top quartile VC: 20%+ net IRR. Bottom half: often negative.
VC return drivers: (1) Power law - top 10% of investments produce 90% of returns. (2) Massive failure rate is built into the model. (3) Winners need 50-100x returns to compensate for losses. (4) Fund construction matters more than picking individual winners. Realistic individual investor outcomes: hard to access top funds (1M+ minimums), so retail VC exposure typically through SEIS/EIS in or accredited platforms (AngelList) - expect mediocre returns vs top-tier institutional VC.
Quick example
With fund size of 20,000,000 and number of deals of 20 (plus average check size of 1,000,000 and expected failure rate of 70%), the result is 16.99%. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Fund Size, Number of Deals, Average Check Size, Expected Failure Rate %, and Average Winner Multiple. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.
What's happening under the hood
Winners = deals × (1 - failure rate). Winners value = winners × check × multiple. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
Where this fits in planning
This is a "what-if" tool, not a forecast. It helps to test ideas: what happens to the result as the Fund Size or the Number of Deals changes. The value is in the scenarios you run, not the single answer you get from the defaults.
What this doesn't capture
This is a simplified model that holds its assumptions constant. Real outcomes vary with market conditions, costs, taxes, and timing, so the figure is best read as one scenario rather than a forecast.
20 deals × £1,000,000 at 70% failure, 10x winners over 7y = 16.99%.
Inputs
| Winners Count | 6 of 20 |
|---|---|
| Winners Value | $60,000,000.00 |
| Total Deployed | $20,000,000.00 |
| Fund MOIC | 3.00x |
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
The calculator computes the Multiple on Invested Capital (MOIC) by first estimating the number of successful investments. It applies the expected failure rate to the total deal count to determine winners. Each winning investment is then valued by multiplying the average check size by the expected return multiple. The total value of all winners is divided by the total capital deployed across all deals to produce the MOIC. The model assumes a constant failure rate across all investments, uniform check sizes, and consistent return multiples regardless of market conditions or time horizon. It does not account for fees, carried interest, management expenses, the sequence and timing of exits, or variations in performance across different investment stages or sectors.
References
Frequently Asked Questions
VC failure rate reality?
Power law distribution?
Net vs gross returns?
Individual investor access?
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