Bill Gates is certainly correct about the hit rate for venture capital. For every massive success, like Sequoia Capital’s investment in WhatsApp, there are many deals that go nowhere. The Kauffman Foundation has been investing in VC firms for more than 20 years. In 2012, it looked at the returns and found that in the long run, firms returned 1.31 times what was invested. When a few exceptional performers are stripped out, the return rate is even worse. That’s despite billions of dollars invested.
***As many as three-quarters of venture-backed startups fail outright.