The Power Law is a statistics rule which says that a small number of items in a given distribution will have an outsized impact on an overall data set. For a venture capitalist, this means that most of his portfolio companies will fail, a few will produce middling outcomes and a handful will generate the vast majority of returns. In a portfolio of say 30 companies, across which $500 million is invested, if the fund has to show returns of say $1.5 billion, a bulk of that $1.5 billion will come from a single company. Three companies could return 70% of the $1.5 billion.