Venture capital investing not for weak-hearted

The returns on early-seed venture-capital investments look so tasty: an average of 69.1 percent in the last five years.

“But averages can be deceiving,´ said Dave Dwyer, founder and partner in Vista Ventures. “If two swimmers start off across the English Channel, one drowns and the other makes it, you have a 50 percent success rate. Cold comfort for the unsuccessful swimmer.”

So it is with venture capital investments. The risk is high, and the fund manager has to look at each investment as having the potential to return the entire fund. Historically, venture-capital businesses have clustered on the coasts, but have…