If you build a portfolio of less than 20 deals, and especially if you are an early-stage investor where the industry mortality rate is somewhere in the 50% range and maybe higher, you better be damn lucky on the winners and get more than one with strategic ‘exit’ premiums of 7x or more,’ he said. ‘You’d probably need three deals returning at that level to be successful. And deals with that level of return profile are very hard to come by in this day and age. For example if you have 16 companies, it’s highly likely that eight will be goose eggs. The other eight will need to have very strong return multiples to achieve greater than 2x return on the fund.
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