Ward Urban

Did you know that seven out of ten of the world’s largest companies, including Apple and Amazon, were venture capital-backed?1 In addition to the iPhone, venture capital financing has led to the electric car, mRNA vaccine, and the search engine. So, it’s not a hyperbolic claim that venture capital has transformed our day-to-day lives.

For investors who are new to venture capital, it is important to keep in mind that the magnitude of returns within a portfolio are not evenly distributed. A successful venture portfolio operates on a power law scale, in which the vast majority of the portfolio’s returns are earned from a small number of investments. These few companies are the “big wins” that typically drive the profits of the fund.