The Venture Capital J-Curve
Venture Capital Fundamentals (VC 201) | Class 1
The J-curve is a defining feature of venture capital investing. Early in a portfolio’s life, losses are common as some companies fail. Over time, a small number of successful investments can generate the majority of returns — and may compound significantly in later years. Learn why this dynamic makes patience a critical advantage for venture investors.
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What Is This Lesson?
The venture capital J-curve explains why early losses occur and how returns develop over time. - Home
Who Is It For?
Understanding the J-curve helps you stay committed through early losses and positions you to better understand the potential for long-term, outsized returns.
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What You’ll Learn
- HomeWhy early losses are expected — and necessary —in venture portfolios
- HomeWhat “lemons ripen early” means in practice
- HomeWhy venture capital follows a power law distribution
- HomeWhy patience — not timing — is a key advantage in venture investing
- HomeHow venture capital differs structurally from public market investing
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About Your Instructors
David Shapiro
Managing Partner, Blue Ivy VenturesDavid Shapiro serves as Managing Partner of Blue Ivy Ventures, bringing more than 25 years of experience as an investor, adviser, and board member, with expertise spanning both early- and late-stage venture. He previously served as Senior Vice President of Corporate Development and Business Development at DataXu and has additional experience across global venture and private equity.
Mike Collins
CEOMike Collins is an experienced operator across nearly every facet of venturing—from angel investing and venture capital to new business and product launches, as well as innovation consulting. He is a serial entrepreneur who has founded multiple companies, including one partially owned by WPP, and began his career at the venture capital firm TA Associates.
Alumni Ventures and its personnel provide investment advice only to affiliated venture capital funds. AV Academy is not personalized advice for any participant.
This communication is from Alumni Ventures, a for-profit venture capital company that is not affiliated with or endorsed by any school. It is not personalized advice, and AV only provides advice to its client funds. This communication is neither an offer to sell, nor a solicitation of an offer to purchase, any security. Such offers are made only pursuant to the formal offering documents for the fund(s) concerned, and describe significant risks and other material information that should be carefully considered before investing. For additional information, please see here. Achievement of investment objectives, including any amount of investment return, cannot be guaranteed. Co-investors are shown for illustrative purposes only, do not reflect all organizations with which AV co-invests, and do not necessarily indicate future co-investors. Example portfolio companies shown are not available to future investors, except potentially in the case of follow-on investments. Venture capital investing involves substantial risk, including risk of loss of all capital invested. Diversification cannot prevent investment loss; it is a strategy to mitigate investment risk. This communication includes forward-looking statements, generally consisting of any statement pertaining to any issue other than historical fact, including without limitation predictions, financial projections, the anticipated results of the execution of any plan or strategy, the expectation or belief of the speaker, or other events or circumstances to exist in the future. Forward-looking statements are not representations of actual fact, depend on certain assumptions that may not be realized, and are not guaranteed to occur. Any forward-looking statements included in this communication speak only as of the date of the communication. AV and its affiliates disclaim any obligation to update, amend, or alter such forward-looking statements, whether due to subsequent events, new information, or otherwise.