University of Nairobi Risk & Rewards in Venture Capitalism Discussion

Please answer the discussion points below. IN YOUR OWN WORDS (Not what the case says or lists!) YOUR OPINION!

1) Why are venture capitalists not interested in restaurants or small business investments? IN YOUR OWN WORDS?

2) Is the ability to identify an investment “Hit” such as GOOGLE an easy thing to do for a VC? Why or why not?

3) Do you think Sequoia was adequately compensated for their investment in GOOGLE? at 320 times their investment (320x) and $4 Billion? Why?

4) How many ventures does a VC typically invest in?

5) What is meant by “Batting Average” and “Slugging Percentage”? Why are there so many baseball references to VC investments?

6) Why do VC firms still have many investments in the 1X to 10X range after decades of investing and detailed due diligence? Shouldn’t their averages be increasing consistently? Why/Why Not?

7) What is MPT (not in the case) Modern Portfolio Theory, and how is it applied to VC investments?

8) What are the factors influencing individual payoffs? Which do YOU think is most important?

9) Does Table 14 look familiar to you? Why?

10) We may take a closer look at table 20 in class, please review in detail.