Rob Go, a co-founder and partner of NextView Ventures, has an interesting post on his blog "Why Do VC's Have Ownership Targets? And Why 20%?" In this post, he explores why venture capital firms target 20% - 30% ownership in their portfolio companies, and whether that metric makes sense for all fund sizes. In his post, he indicates that while a 20-30% ownership stake in a portfolio company may be necessary to generate a meaningful return for larger funds, smaller funds may be able to generate meaningful returns from smaller ownership positions.
While I agree with Rob's post, I would add that a larger ownership stake brings some additional benefits, such as possibly being the lead investor in a round (which means the ability to negotiate terms), obtaining a board seat (versus observer rights), and having a larger role in planning and negotiating future financing rounds and exits.
Here's a link to his post:
http://robgo.org/2012/07/09/why-do-vcs-have-ownership-targets-and-why-20/
While I agree with Rob's post, I would add that a larger ownership stake brings some additional benefits, such as possibly being the lead investor in a round (which means the ability to negotiate terms), obtaining a board seat (versus observer rights), and having a larger role in planning and negotiating future financing rounds and exits.
Here's a link to his post:
http://robgo.org/2012/07/09/why-do-vcs-have-ownership-targets-and-why-20/
