From Alibaba to Zynga: 40 Of The Best VC Bets Of All Time And What We Can Learn From Them
These venture bets on startups that “returned the fund,” making firms and careers, were the result of research, strong convictions, and patient follow-through. Here are the stories behind the biggest VC home runs of all time.
In venture capital, returns follow the Pareto principle — 80% of the wins come from 20% of the deals.
Great venture capitalists invest knowing they’re going to take a lot of losses in order to hit those wins.
Chris Dixon of top venture firm Andreessen Horowitz has referred to this as the “Babe Ruth effect,” in reference to the legendary 1920s-era baseball player. Babe Ruth would strike out a lot, but also made slugging records.
Likewise, VCs swing hard, and occasionally hit a home run. Those wins often make up for all the losses and then some — they “return the fund.”
Fred Wilson of Union Square Ventures recently wrote that for his fund, this translates to needing at least two $1B exits per fund:
“If you do the math around our goal of returning the fund with our high impact companies, you will notice that we need these companies to exit at a billion dollars or more,” he wrote. “Exit is the important word. Getting valued at a billion or more does nothing for our model.”
CB Insights analyzed 40 of the biggest VC hits of all time to learn more about what those home runs have in common.
To do so, they pulled data and information from web archives, books, S-1s, founder interviews, the CB Insights platform, and more.
For each company, they dove into the remarkable numbers they posted before their IPOs and acquisitions, the driving factors behind their growth, and the roles of their most significant investors. Below, they will show the analysis on each specific case.
Note: Unless specifically stated, the “returns” discussed in the sections below are calculated based on the nominal value of the company at IPO or at acquisition. Earn-outs (such as those that apply to, for example, Stemcentrx) and lockups are not factored into those calculations.
The following compaines are analysed:
- Groupon
- Cerent
- Snap
- King Digital Entertainment
- UCWeb
- Alibaba
- JD.com
- Delivery Hero
- Zayo
- Mobileye
- Semiconductor Manufacturing International (SMIC)
- Meitu
- Zynga
- Lending Club
- Genentech
- Stemcentrx
- Workday
- Rocket Internet
- Qudian
- Acerta Pharma
- Nexon
- Zalando
- Ucar Group
- Webvan
- Qualtrics
- Mercari
- NIO
- Meituan Dianping
- Xiaomi
- Pinduoduo
- Ele.me
- Adyen
- GitHub
- Flipkart
- Spotify
- Dropbox