Many of us thought that venture capitalists were getting as unrealistic as many of the entrepreneurs’ plans that come across their desks. They had gotten to the point where they would only look at a “home run” plan that had the potential for 100% plus annual returns. But that is beginning to change. They are now willing to realize lower returns in exchange for fewer bad deals as seen today at Red Herring:
The percentage of projects that finished in the red, with the VCs getting back less than they invested, dropped. Of the 154 deals done during 2005, VCs were left holding the short end of the stick on 48, down from 62 investment failures out of the 183 deals done in 2004, according to the study by the National Venture Capital Association and Thomson Venture Economics.