# What is Power Law?

The pattern in venture returns where a few investments produce most of the gains and most return little or nothing. It is why investors back many companies and ask whether each one could grow very large.

## In real work

Looking back at her 30 angel investments, Mei saw the power law at work: two companies made up nearly all the gains and 19 returned nothing.

## Related terms

- [SAFE](https://prompthausapp.com/learn/safe.md)
- [Valuation Cap](https://prompthausapp.com/learn/valuation-cap.md)
- [Dilution](https://prompthausapp.com/learn/dilution.md)
- [Pro Rata](https://prompthausapp.com/learn/pro-rata.md)
- [Limited Partner](https://prompthausapp.com/learn/limited-partner.md)

## How is this different from Googling it?

Google gives a definition. Prompthaus pairs each term with how it shows up in standups, PRs, prompts, and design reviews. Then it quizzes you until the word sticks. One term a day on iPhone.

- Category: Venture
- HTML: https://prompthausapp.com/learn/power-law
- App Store: https://apps.apple.com/us/app/prompthaus-ai-vocabulary/id6776314407