How Success Begets Success

Eric Rosenfeld

February 2025

There are two rules for success:

1.    Never reveal everything you know

2.    …

When we launched the Oregon Venture Fund in 2007, we had no idea if we’d be successful. A collaborative, regionally focused, community supported venture fund was a new concept that had never been tried and tested. Our lawyers, accountants, and advisors told us it was a bad idea…

• Some said you can’t raise money in Oregon and, even if you could raise a couple million, the fund economics wouldn’t pencil.

• Some said our geographic focus on Oregon and Southern Washington was too narrow; that we wouldn’t find enough fundable startups to create a diversified, winning portfolio.

• Some said our collaborative approach to surfacing, selecting, and supporting startups posed too much liability.

• Some said our annual venture-as-a-service subscription model would be too administratively complex, burdensome, and expensive.

Like many of the entrepreneurs we back, we ignored their advice. As of today, the Oregon Venture Fund has invested nearly $200M into 82 regional startups that have collectively grown to over $5B in total value and created over 6,000 jobs. Thanks to the hard work of our portfolio entrepreneurs, OVF investors are averaging a 17% net annualized rate of return and a 3.7X net total return. And that’s over an 18-year period.

To be sure, we’ve also had our fair share of failures. 60% of our investments have failed to generate a positive return and just 16% of our portfolio companies have produced 80% of the gains returned to investors.

OVF’s sustained outperformance over the long-term has caused a small but growing number of journalists, investment advisors, and other venture funds to inquire about our strategies and focus. How can a mid-size fund focused on founders in Oregon and Southern Washington consistently outperform the larger funds in economically booming Seattle and 75% of the funds in Silicon Valley, the global epicenter of innovation?

OVF’s regional focus certainly helps, as does our collaborative, highly participatory investing model and rigorous diligence. We aspire to be a learning organization – we write pre-mortems and detailed investment memos before we invest and conduct post-mortems when a company exits or dies. We constantly try and test new approaches to our work and strive to learn from both successes and failures. However, those factors don’t fully explain what’s happening. In the venture industry, as with business in general, one can’t overestimate the roles of plain-old good luck, good fortune, and good timing.

What many also fail to fully appreciate about the venture industry is that success begets success. At The Ohio State University, a national championship attracts more top players, more top players result in more wins, more wins attract more top players, and so on. With venture capital, a similar virtuous – or vicious – cycle is at play. The cycle is virtuous if you’re a capitalist, vicious if you’re socialist. In football, it can be a vicious cycle if you’re Stanford or Oregon State.

Oregon Venture Fund’s early success backing Elemental Technologies, Lumencor, Jama Software, and others helped attract more accomplished and expert investors. Accomplished and expert investors not only help attract more top founders, they also improve the rigor and sophistication of our diligence and decision-making. Rigorously selected top founders help improve portfolio performance. Superior portfolio performance attracts more top investors, and so on. And the cycle repeats. Success begets success. One may ask whether this is fair. However, in the hardball world of venture capital, there is no such thing as “fair.” There’s only supply and demand. So, don’t ask.

The most qualified and promising startup founders are selecting their investors as much as their investors are selecting them. OVF’s 180 venture partners helped attract to our portfolio the founders of Customer.io, Eclypsium, and Hydrolix, a few of the local breakout companies that are on a path to becoming billion-dollar unicorns. And the performance of those fast-growing companies helps the fund continue to attract and retain more world-class venture partners. In venture capital, you’re either spiraling up, or spiraling down. Funds that lose their momentum seldom recover. The handful of funds that can maintain momentum capture the bulk of the industry’s returns. There’s no NFL draft to try to even the playing field. In that way, the virtuous cycle can feel vicious for those left behind.

OVF’s continued success also depends on us continuously and humbly challenging and testing our ideas and assumptions. This leads to the advancement of our collective knowledge that, when shared, inspires and spurs the innovations that propel the fund forward and improves our effectiveness and results.

So, to what does the Oregon Venture Fund attribute its growth and success to date? Who really knows for sure. Whether you’re an investor, entrepreneur, or collaborator, we hope it feels good to be part of a movement with a self-transcendent purpose. Success for OVF should translate into future success for our business community and for our state and region. Which we sorely need to beget more success for all.