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Q: What rate of return would a venture capitalist generally expect?
Answered by Phil Verity, Mazars
The initial rate of return most VCs would expect is 25 per cent. A VC will be looking to achieve this - at least - and exit a business in four to five years.
Phil Verity is a Partner at Mazars, the international accounting and business advisory firm, and Head of the Mid Corporate Market business line.
Find a VC who invests in the business area you are in. "The BVCA represents private equity and venture capital in the UK." www.bvca.co.uk
Report this comment »In my experience the advice that most VC's are looking for 25% IRR is over-simplistic and potentially misleading. Whilst a VC might be looking for such a return on overall portfolio, each deal's expected IRR will be decided by risk profiling. I have been involved in deals where more than 50% (high risk) was expected and others less than 20% (very low risk. Also, IRR is generally taken to mean "Internal Rate of Return" (a discounted cashflow calculation), not "Initial Rate of Return".
Report this comment »Most early-stage investors / angels / VCs will look for 30% pa, ie nearly 10 times initial investment in 3 years, ie £1000 invested looking to get back £10,000 over 3 years. High risk high rewards, less risky lower rewards.
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Whats the best way of approaching/getting access to VCs attention. I have a project assuring 27% IRR in 4 years. Would like to understand how do i expand my reach to VCs.
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