The Utah Fund of Funds sponsors monthly seminars on topics helpful to entrepreneurs.  These no charge events bring people from within the venture and entrepreneurial sectors to help share their insights.  In October, the Fund of Funds held a very helpful seminar on venture economics - the J curve, how VC's work with their investors, and also the difficulty VCs face today in getting the returns that they need - the vast majority of exits are now M&A exits, with relatively modest multiples and only a small handful of the big exits needed to drive overall returns. 

VCs operate (on a simplified model) of
10% BIG WINs
30-40% WIPEOUTS (little or no return to the fund)
50-60% BREAKEVEN (they basically pay back the money put into them).

As you can tell, the 10% of big wins have to pay for everything else, plus that "average" 20%/year return on investment that VC's have historically delivered.

I didn't have any good slides to reference, but just identified an excellent set of slides from an IBF conference last summer.  This one is by Rick Hayes, Managing Partner, Oak Hill Investment Management, titled
"Investing in Venture Capital Today" (it can be found at www.ibfconferences.com/ibf/control/presentation/Rick%20Hayes.pdf).

If you are looking for, or are going to be looking for, venture capital, it really pays to understand the dynamics of the VC industry.  Then you can better understand, even if you don't like, the types of valuations that VCs want, and the types of businesses that interest them.  It may even save you time and frustration!