Venture Capital Return Calculator

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. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.