Most VC funds do have exit dates and specific life spans (typically 7-10 years). The way it was explained to me that if you have 10 companies in your portfolio, by year 7 you will have:
* 3 total busts. Out of business; zero return on investment.
* 4 "walking dead". Still in business, but just barely breaking even. Might as well be zero return because these investments are not liquid (who wants to buy a 7-year-old risky business with no profit?) Anymore these end up as acqui-hires with the VC getting pennies on the dollar.
* 2 minor successes. Good, profitable companies that will probably never produce a hockey-stick graph. 2x-3x return.
* 1 home run. If you're lucky. 10x return (though usually closer to 5x).
Her example was bad, but it was just an example. VC is a tough industry to actually make any money in. VCs don't pressure founders to do things because they are greedy, it's because they're scared of losing their shirts.
Big changes in approach are inevitable in early-stage companies: things become apparent after 1-2 years that weren't initially. Early stage companies involve so much uncertainty that trying to stick to a plan for the sake of sticking to a plan is folly.
His numbers are in a different context; but I get his point. Venture investing is a portfolio business; you fully expect a high failure rate.
Most VC funds do have exit dates and specific life spans (typically 7-10 years). The way it was explained to me that if you have 10 companies in your portfolio, by year 7 you will have:
* 3 total busts. Out of business; zero return on investment.
* 4 "walking dead". Still in business, but just barely breaking even. Might as well be zero return because these investments are not liquid (who wants to buy a 7-year-old risky business with no profit?) Anymore these end up as acqui-hires with the VC getting pennies on the dollar.
* 2 minor successes. Good, profitable companies that will probably never produce a hockey-stick graph. 2x-3x return.
* 1 home run. If you're lucky. 10x return (though usually closer to 5x).
Her example was bad, but it was just an example. VC is a tough industry to actually make any money in. VCs don't pressure founders to do things because they are greedy, it's because they're scared of losing their shirts.