Metrics & Performance
Batting Average
Last updated
Quick Answer
The percentage of a VC's investments that generate positive returns, as opposed to partial or total losses.
VC Batting Average
Batting Average = Profitable Exits / Total Investments
Where
- Profitable Exits
- = Number of investments returning > 1x
- Total
- = Total number of portfolio companies
What it is
A VC's batting average measures what fraction of their portfolio companies return more than the invested capital. While important, batting average is less meaningful than magnitude of winners in venture — a fund can have a low batting average but exceptional returns if it catches a single outlier.
In Practice
A fund with a 30% batting average (7 of 10 investments lost money) still returned 5x because one company returned 40x the initial investment.
Operational context
What good looks like
The term is tied to a real workflow, not just a definition.
Ownership, timing, and evidence are clear.
The reader can tell what decision the concept supports.
Related terms point to the next useful explanation.
Why It Matters
Batting average helps contextualize a VC's judgment, but power law dynamics mean one massive winner can overshadow many losses. Both consistency and outlier-hunting matter.
VC Beast Take
In baseball, a .300 batting average makes you an All-Star. In VC, it makes you roughly average. The game isn't about not striking out — it's about home runs.
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Tools & Resources
Frequently Asked Questions
What is Batting Average in venture capital?
A VC's batting average measures what fraction of their portfolio companies return more than the invested capital. While important, batting average is less meaningful than magnitude of winners in venture — a fund can have a low batting average but exceptional returns if it catches a single outlier.
Why is Batting Average important for startups?
Understanding Batting Average is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Batting Average fall under in VC?
Batting Average falls under the metrics category in venture capital. This area covers concepts related to the quantitative measures used to evaluate fund and company performance.
Sources & References
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