Raising a Series A Requires a Reasonable Chance at a $250 Million Exit

John Greathouse, an entrepreneur turned VC, writes one of my favorite anecdote-filled startup blogs called Infochachkie. His most recent post is titled The Series A Crunch Is For Entrepreneurs Who Can’t Create Their Own Luck. In the post he quotes one of his VC partners, Jim Andelman:

If a venture does not have a reasonably high-perceived chance of a $250 million exit, most Series A investors are passing.

In the startup world, billion dollar exits are idolized and thrown about like they’re an everyday occurrence. In reality, there are very few deals that exceed $100 million, let alone $1 billion. With venture-backed startups taking longer to reach an exit, and startups raising more money because of the long time horizon, shooting for a $100 million exit is no longer enough. Now, the target is a $250 million exit, or as my friend likes to say “I shoot for a $300 million exit so that everyone will be happy and make good money.”

The next time you hear an entrepreneur talk about wanting to raise VC money, ask them how their company will be worth $250 million in 5-7 years.

What else? What are your thoughts that raising a Series A requires a reasonable chance at a $250 million exit?