Fred Wilson: How to Calculate a Return on Investment

January 26, 2010
miproconsulting
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Fred Wilson is a VC and principal of Union Square Ventures. As a VC, he points out a consistent error made by entrepreneurs pitching their business plans:

As I look over the business plans and projections that these entrepreneurs share with us, one thing I constantly see is a lack of sophistication in calculating the investor’s return.

Wilson proposes instead an ROI calculation method called the cash flow method. It’s very interesting, and you can read about it here. He even provides an example of the method via Google Docs.

(Via Dan Benjamin)