When it comes to venture capital, a tiny percentage of companies generate the lion's share of returns.

If you look at Y-Combinator's Top Companies index of over 180 of its alumni, just three companies (Airbnb, Stripe, and DoorDash) were responsible for more than half the returns.

VC is a game of many swings, few hits, and even fewer home runs. But those home runs have the potenial to not only return a fund, but generate outsized returns for investors. That's the game.

And if your firm isn't on the cap table of these home run companies, generating target returns - typically 3x net - is going to be an uphill battle. In fact, only about 5% of venture funds hit this lofty goal, with half failing to return the fund - that is, you would have been better off putting your money in the S&P500.

‍

The Biggest Home Runs in American History

CB Insights published a list of the 45 biggest VC home runs of all time. Here's a visual representation.

‍

So, do the best brands get the best deal flow?

To answer this, I extracted the American companies from the CB Insights 2021 list, and added Stripe and Door Dash for good measure, leaving us with 22 companies.

I reviewed Crunchbase to determine which investors got in on the seed, series A, and series B rounds of these companies.

I then made a judgment call on which investors are premium brands (aka the best VC brands) based on their reputation, portfolio, and track record (apologies to firms who didn't make the grade - don't take it personally).

‍

Here's what I learned:

• In 20 of 22 cases, premium VC brands led the Series A and Series B rounds
• The majority of investors in the Series A and B rounds were premium brands
• Of the 10 companies with available seed round information, 80% were led by premium brands and 70% featured only premium brands.
• Sequoia appeared on the cap table of 8 of these 22 companies (36%)

Here's the full list.

Call to action

Given this, VCs need to be doing everything they can to:

• build relationships with premium brands
• elevate their own brand through content, events, PR, and getting a home run in their portfolio
• network hard
• demonstrate and broadcast a truly unique and valuable differentiator to the market