One of the great frustrations for entrepreneurs is that venture investors require such high hurdle rates on their investments. Of course, we all know that venture portfolios don't typically yield returns even approaching the hurdle rates required on their investments.
The blog Carried Interest, a private equity focused site talks today about venture returns and the "J" curve. The key thing to take away from the post is that in the short run, returns are typically negative--that's the "J" curve.
It is important to understand portfolio performance from the perspective of the investor when you, as an entrepreneur, go to negotiate with the investors. In every deal, investors seem to be swinging for the fences to help compensate for the risk that your deal won't finish the curve!
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