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Venture Capital
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VC Fundamentals & Mindset
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Power Law
In venture capital, what does “power law returns” imply about how a fund makes money?
A
A few outliers drive most returns, so upside matters more than avoiding small losses
B
The best strategy is to maximize dividends and near-term cash flows
C
Returns are normally distributed around a stable mean
D
Most deals return similar multiples, so diversification is less important
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