[ChuckMcM]

There are some great web sites on how venture capital works, I can recommend https://hbr.org/1998/11/how-venture-capital-works for the basic model (this was pre-dot-com bubble bursting so it got tweaked) and Fred Wilson's summary (http://avc.com/2014/05/vc-fund-economics/) is a good followup.

edit: Wright->Wilson, thanks gist.

[gist]

> Fred Wright's summary

You mean Fred Wilson.