Frequency of home runs

A few years ago, Correlation Ventures shared a chart that showed the distribution of US venture capital returns with data between 2004-13.

65% of venture capital investments either went bankrupt or returned less money than what was invested. An additional 25% gave a 1-5x return on investment.

The hits came from the remaining 10%. 6% returned 5-10x. 2.5% returned 10-20x and 1.5% returned 20x+.

Home runs, in essence, happen <5% of the time. But, they drive the bulk of venture capital returns.

I like thinking of this graph because this is a good way to think about projects in our careers too. A vast majority of things may either not work out as well as we hoped or work out just fine.

But, assuming we’re learning/developing our skills and making thoughtful bets, we’ll give ourselves the opportunity to hit the occasional home run.

So, don’t get discouraged if things are going well right now. You never know if a good day is a good day anyway.

All it takes is for a home run or two to work out… in time.