I built a 4 step framework to understand the VC business. Access → Picking → Entry → Exit. It works for all types of VC’s irrespective of their size, industry focus & geography.
- Access: target visibility of 80 % of market deals; aim to attract top‑1 % founders.
I track these metrics quarterly, treating the fund like a startup and updating the Access, Picking, Entry, and Exit KPIs each quarter.
- Picking: receive ~400 inbound applications each month and review them all.
- Entry: founders must elect to take the VC’s capital – reciprocal choice.
- Exit: model ownership and realistic exit odds across 20‑50 portfolio bets.
I adopt the three‑criterion definition of VC‑PMF: top 1% founders pitch to you, they take your money at a lower price than elsewhere, and you have built the capability to pick desired founders/markets and the confidence to pass on misaligned deals.
YC’s benchmark: ~4.5% of YC‑backed startups since 2010 have become billion‑dollar companies, and founders choose YC’s standard terms even after receiving higher‑priced offers elsewhere.
You start with 50/50 odds. If you are awesome at access, picking, and have a strong brand - you’ll tilt the odds in your favor. Let’s say 70:30 → like counting cards when playing blackjack, like in the movie 21. If you don’t focus on access, picking, and entry, the odds move against you - 30:70 to the house edge.