“Loss ratios” vary by the stage of firm.

The early-stage you invest, the more of your investments won’t make it.

You can roughly figure that:

  • Angel investments: 90% lose money or barely make 1x.
  • Series A VC: 60% lose money. Most of those, you lose all your money.
  • Series B VC: 40% lose money.
  • Later-stage VC: 33% lose some money. Very few lose ALL the investment.

Thing is, this is by number of investments — not by $$$.

You ideally only double down on your best investments. This has the effect of flipping a lot of these numbers around. I.e., for a Series A VC, 60% of your investments may return <1x, but ideally, that represents less than 30% of your fund. Because you only use your “reserves”, and your net biggest checks, on your best investments.

And the later stage you invest, ideally, it’s a question of the multiple. If you are a late-stage investor, hopefully your “worst” investments do 0.5x, and your best do 5x, with an occassional one better than that. Late-stage investors are really shooting for 2x net of fees.

A total write-down of a unicorn can be a career -nding move for a late-stage investor. May be irrelevant to an angel investor.

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