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Q&A: A VC's expected return

Article Date:  Apr 02 2007

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.

Comments  [5]

Sonia Sharma
Thursday 28th June 2007

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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boyd Lee
Sunday 1st July 2007

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

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boyd Lee
Sunday 1st July 2007

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 Boyd

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Barry Orton
Tuesday 21st August 2007

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".

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asif mashhadi
Wednesday 13th February 2008

MOst early stage investors ,angels /vc s will look for 30% pa ie nearly 10 times initial investment oin 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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