Research Reports

A new VC agenda for Germany and Europe - Why we need to mobilize private growth capital and how we can do it

In this study, we highlight the persistent major hurdles hindering access to venture capital, including a lack of private capital from institutional investors, internationally uncompetitive legal frameworks and a lack of opportunities for startup employees and citizens to participate in the value creation of startups and young companies.

Returns in Venture Capital (VC) are characterized by extreme outliers and a notable number of defaulted transactions. Building a well-diversified portfolio is pivotal for investors to achieve sufficient downside protection without disproportionately trimming upside potential. This report simulates VC returns to understand the impact of portfolio size on risk and return potential. The simulations are based on the semicontinuous log-normal model of Juergens et al. (2022). The analysis is conducted with 10,000 Monte Carlo simulations, each with a universe of 900 VC funds in total, which are equally distributed in early-stage (pre-seed and seed), mid-stage (Series A to Series B), and later-stage (Series C or later).