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Huh, are there really a significant # of investors who put money into $20MM companies looking for 5x returns? That's surprising.
by SatvikBeri 10y ago
Huh, are there really a significant # of investors who put money into $20MM companies looking for 5x returns? That's surprising.
- harryh 10y agoThere aren't really.
- the_watcher 10y agoOnly if you're talking about venture investors. There a lot of types of investors who each have different tolerances for risk-return ratios.
- harryh 10y agoNot really. Pretty much the more risk people take on the more return they are shooting for so the ratio stays the same.
- clock_tower 10y agoOver in the mainstream stock market, an 8% total return per annum, repeated indefinitely, is more of an ideal than a reality; CalPERS (the California pension system) has been completely unable to attain it. I suspect that the same is true of Silicon Valley, once you factor in the timeframe question and the high risk of failure in any single investment.
- sokoloff 10y agoLooking for and being quite happy to get are two different things. I'll happily take a 5x on any of my angel investments. I didn't go into them thinking that was the best possible (hoped for) case. Getting 5x on all of them would be above my average.
- beat 10y agoI would also expect angel investors to be a little more understanding about slightly less than "MAX GROWTH NOW!!!!!", relative to a large VC firm, and less likely to force the founders into a path the founders don't want to take if the numbers aren't ideal..
- mbesto 10y agoYes, many of them are my clients. But they'll go invest $200M across 10 companies and hope one gets a 5x, 3 get 2-3x, and the rest marginal gains.
- the_watcher 10y agoThere are more kinds of investors than just venture investors. Small shop private equity often invest sums below this, and they're interested more in reducing the risk of their return than finding a portfolio maker, for example.