[redschell]

>The rule of thumb among venture capitalists is that some 20 percent to 30 percent of companies fail, returning nothing to any investor, including the venture capitalists.

Earlier in the article, it mentions the statistic that I'm familiar with, which is that roughly 75% of venture-backed companies fail.

What gives?

[tempestn]

"An unpublished study by Shikhar Ghosh at the Harvard Business School found that three out of four companies backed by venture capital did not return the investment. Again, it is in these cases where the founders and employees typically are entitled to receive no payment."

In 75% of cases, the founders and employees receive nothing. In 20-30% of cases, the VCs also receive nothing.

[redschell]

Ah, I see. Thanks for the clarification.

[dragonwriter]

Perhaps two different definitions of "fail"; the "returning nothing to any investor" is a fairly strong definition of failure, and I suspect the common 75% number is based on a weaker definition of failure (e.g., returning less than 1:1 on investment is a plausible weaker definition of failure for a company, though I don't know if that is what the 75% number is based on.)