Barry Bonds the Venture Capitalist

First let’s set the ground rules.

1. At bats = # of investments
2. Strikeout = 0x return
3. Single/Double = 1x — 4x returns
4. Triple = 5x — 10x returns
5. Home run = >10x returns
6. Let’s use (and forget PED’s) Barry Bonds 2001 Stats.
7. Each At Bat = \$50,000 investment
8. Assume all investments happened day 1 and exited end of year 5.
9. 2/20 fee structure

How were Barry’s VC returns in 2001?

476 at bats = \$23,800,000 invested

93 strike outs. 93 X 50,000 = \$4,650,000 in losses

91 singles/doubles, call this average 2x so 91 X 50,000 X 2 = \$9,100,000 in returns

2 triples, call this 7.5x so 2 X 50,000 X 7.5 = \$750,000 in returns

73 home runs, call this 20x return on average so 73 X 50,000 X 20 = \$73,000,000 in returns

Gross profits = \$78,200,000

Management fees over 5 years = 2% X \$23,800,00 = \$476,000 X 5 = \$2,380,000

20% cut of gross profits = \$15,640,00

Net profits = \$78,200,000 — \$2,380,000 — \$15,640,000 = \$60,180,000

Simple math

(\$60,180,000 — \$23,800,000)/\$23,800,000 = 153% over 5 years.

Yes I know you can argue this isn’t accurate, VC’s pay the management fees back, it’s not how they would measure returns, I didn’t count walks or stolen bases or other intangibles, etc. I think it’s a wash when you consider opportunity cost and all the VC’s tangibles for this to take place….it will even out. This was just an exercise I did out of curiosity. Let me know what you think.

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