When a 3.8x “Exit” Becomes 1.6x: The Gap Between Markups and Returns

Per SaaStr, a venture fund's recent exit hit three point eight times on the headline valuation but nets out to just one point six times in actual investor returns. The gap: dilution from later funding rounds that shrink your ownership percentage, working capital adjustments and taxes deducted at close, and roughly ten percent of proceeds held in escrow for a year. A company's value can triple while your per-share return barely doubles if you're diluted along the way. Stretched over an eight-year hold, that one point six times translates to roughly seven percent annually—high single digits for a venture investment. It's a reminder that the press release number is never the number shareholders actually receive.

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