VC Portfolio Simulation
Most startups fail.
So how do you invest as a Venture Capitalist?
You have CHF 100’000 to invest into early-stage startups. You don't choose which ones win. The outcomes here are random, because in real life they're almost impossible to predict. Your job is to decide how many startups to back and how much to put into each.
Set your strategy and invest. Run it once or a thousand times, and see how your portfolio performs.
Your strategy
Fund: CHF 100’000CHF 10’000 into each.
How the outcome model works
| What each startup returns | How often |
|---|---|
| 0× (startup failed) | 65% |
| 3× | 25% |
| 7× | 6% |
| 15× | 2.5% |
| 30× | 1% |
| 75× | 0.5% |
Every startup's outcome is drawn at random from this table. These odds are a simplified version of Correlation Ventures' study of over 27’000 US venture financings from 2009 to 2018, which found that roughly two thirds return less than the money invested and only about 4% return 10x or more. We collapse each of their return bands to one representative multiple, so the average startup here returns about 2.2 times your money while 65% return nothing at all.
The workshop
Adventure Capital: Pooling Money to Fund the Impossible
The simulation above is a taste of a longer talk. Adventure Capital is a 45-minute workshop about how venture capital really works, built around the same idea you just played with: most startups fail, and a rare few return everything.
The workshop opens with the history of financing risky ventures, from medieval trading partnerships to the whaling fleets that backed dozens of voyages knowing most would come home with nothing. Those backers had already worked out, by losing ships, that the only way to survive a world of long odds is to spread your money and stay in the game long enough to catch the rare winner.
From there, the workshop turns to the numbers behind modern venture. Why the average return and the typical return tell opposite stories, why the best investors expect to be wrong most of the time, and why founders are pushed to chase enormous markets. You will leave the workshop able to read startup returns the way investors do, and with a clearer sense of how early-stage companies get funded, whether you plan to invest in the next big thing or build it.