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That math makes sense if “90% of investments fail”, which is a reasonable number if you only invest in companies that need to grow to $1B to succeed. But if you
by cookingrobot 7y ago
That math makes sense if “90% of investments fail”, which is a reasonable number if you only invest in companies that need to grow to $1B to succeed. But if you were willing to invest in companies that top out much smaller, theoretically you could chose companies based on likelihood of profit instead of growth, and get a much lower failure rate.
The other thing you’d need to be careful of is drain on your time. You’d need to be much less available to companies over time, or you’d get spread too thin by too big a portfolio.
- askafriend 7y ago> But if you were willing to invest in companies that top out much smaller Then that person would literally not be practicing Venture Capital. Venture Capital is a very specific type of funding with a specific type of risk profile. If you don't like the implications, then don't seek Venture Capital. This is what people don't understand. No one is forcing you to be a venture backed company.
- cookingrobot 7y agoIs that a semantic argument - that low risk investments should be called something other than "venture capital"? What term would be best for that? Note that VC does have a wide variety of risk profiles - with later stage usually being lower risk and earlier stage being higher. Who serves the market of early, low-medium risk (and therefore lower returns)?