If you are an entrepreneur looking to raise capital from VCs, it's important to understand VC economics. This understanding will save you time and effort by helping you identify the right VCs to target and how to frame your conversations with them.
For a successful early-stage VC, the minimum expectation seems to be that in a portfolio of 20 investments, one or two most successful investments will return the fund, the next five will return it once more, and the remainder will return it yet one more time. This gets you a 3X on your fund. Of course, there are large variations on the distribution, but it's a good enough example to start with.
If you are a $50m+ fund, you can not assume each of your investments will return the fund (unless you are a top-tier shop in Silicon Valley). But you do need to ensure that each one can at least return 30-40% of your fund, if things go well. That way, if half of your portfolio goes well, you can count on a minimum of 3X.
Our fund is $150m, so we would typically like to see a $100m+ exit in each of our portfolio companies, if things go well. This math is usually behind our "no"s to founder teams, where we see a good business, but not enough size in market opportunity.