🎯 VC Math Explained by Nichole Wischoff: Why the Price You Pay Matters

Every VC has to live with one uncomfortable truth:

The price you pay at entry directly controls your ability to win later.

Nichole Wischoff breaks this down perfectly — let’s walk through her logic step-by-step:

📊 The VC Math Table

Investment	Entry Valuation (Post-Money)	Ownership %	Exit Value	Return
$2M	$20M	10%	$1B	$100M
$2M	$100M	2%	$1B	$20M
$2M	$100M	2%	$5B	$100M

🧮 Breaking Down The VC Math 

✅ Row 1 — The Classic Early Stage Deal

• You invest $2M at a $20M post-money valuation.

• You own 10% (calculation: $2M ÷ $20M).

• Company exits at $1B.

• You receive 10% of $1B = $100M.

• ✅ You successfully returned 50% of a $200M fund — very strong.

🚩 Row 2 — The Expensive Seed Round

• You invest $2M at a $100M post-money valuation.

• You own only 2% (calculation: $2M ÷ $100M).

• Company still exits at $1B.

• You receive 2% of $1B = $20M.

• ✅ Still positive, but much smaller — now you need many such exits to return your fund.

🚨 Row 3 — Needing Massive Outcomes To Win

• Same $2M invested at $100M valuation, still 2% ownership.

• The company exits at $5B.

• You receive 2% of $5B = $100M.

• ✅ You finally reach your $100M return — but only because the exit size was massive.

🔎 The Fund Math 

Nichole Wischoff explains this tension perfectly:

• Seed stage valuations are inflating.

• Many early-stage companies have no revenue but command $50M–$100M post-money valuations.

• At these prices, VCs are forced to write larger checks for smaller ownership percentages.

• To justify that investment, the companies must deliver much larger exit values (sometimes 5x–10x larger than historical exits).

🚀 The VC Math Summary: Why Entry Price Matters

The higher your entry valuation, the larger your exit needs to be for you to make the same profit.

If you invest at $20M post, a $1B exit is already great.
If you invest at $100M post, you may need a $5B or $10B exit to make the same return.

⚠ The Current Reality

• Nichole Wischoff raised her $50M fund expecting to buy ~10%-15% ownership across 30–35 companies.

• But now, in 2025, many deals are pricing so high that her same $2M check might only buy 5% or less.

• She asks the big VC question:

  • Do we pay these high prices?

  • Do we sit on the sidelines?

  • Or do we aim for fewer, more disciplined deals?

💡 The Takeaway: This Is Why VC Math Keeps People Up at Night

Venture capital is all about balancing:

• Check size

• Ownership percentage

• Exit potential

When valuations go up, you need truly massive exits to return the fund — especially for early-stage funds like Nichole’s.