In today’s world, technological innovation and economic advancement are largely driven by Venture Capital (VC). Venture capital deals are critical in triggering the growth of innovative startups with a potential for rapid development by providing the necessary funding to boost operations, accelerate growth and penetrate new markets.
Superficially, it appears straightforward to strike a deal with the model of raising capital to invest in early and growth-stage companies. However, in an ever-changing VC industry where innovations are accompanied by a large element of risk, there are multiple dynamics underpinning choices of VCs when aiming at sustain-able growth and Returns on Investment (ROI) VC success rates vary widely though it is generally accepted that a significant portion of funds do not achieve their target returns! According to some industry reports, only about 5% of VC funds generate 95% of the industry’s returns. A2023 study by Cambridge Associates found that the 20-year annualized average return’ for VC funds was 12.33% compared with 12.40% for the MSCI All-Country World Index of global stocks. Meanwhile, research from Harvard Business School suggests that as many as 75% of venture-backed companies never return cash to investors.
