You said successful? Actual and perceived performance of venture capital in france

Using a theoretical financial model depicting a typical venture capital fund specialized in start-up companies (seed/early stage financing), we have invited professional investors and entrepreneurs to suggest an estimated internal rate of return (IRR) to characterize three portfolio outcomes: "success", "average" and "failure". Our findings reveal a perception that is disconnected from reality, namely a strong propensity to overestimate the notion of success and to underestimate that of failure. The causes of this overoptimistic perception arguably include an element of pure risk aversion as well as a dose of fantasy, but this is probably not the whole story. In a subsequent phase, we intend to use a broader sample to determine if, and to what extent, this is a European bias that calls for a European response.