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False. VCs really want to build a fast growth enduring company. That’s very hard to achieve, but it is what they want. > The whole VC model is burn baby burn u

False. VCs really want to build a fast growth enduring company. That’s very hard to achieve, but it is what they want. > The whole VC model is burn baby burn until you can get big a flip of the asset.

deleted 7y ago
[deleted]
taneq 7y ago
Well yeah, but if they can’t have a unicorn then they’ll advise you to staple a horn on your horse rather than investing in a stable and some oats.
hinkley 7y ago
What people want and the steps they take to get that are often not in agreement. It's hardest to achieve something when you ask people to give you something that is at odds with that goal, which is basically a long running complaint about the entire VC business. If occasionally they get a fast growth enduring company it could be luck or a stronger personality on the other side of the table as much as by any action of theirs. You manage what you measure and what they measure most is growth, not endurance. Half the time when I push for endurance at my place of work I feel like some sort of freedom fighter, subverting a system that wants - no, demands - something very different from me. I could tell you that I want to find is a company that grew somewhat organically that has a big growth opportunity, but that would be a lie, because I don't want lottery tickets anymore. I just want to work on something a lot of people have a positive experience with and we make an honest living at. What I mostly find is companies that think if they can just grow all their problems will be solved. And they have VCs that tell them the same thing. The only people who are telling them differently are people who aren't courageous enough to go into business for themselves, or who they've never heard of because they're not a Unicorn. And who listens to those people, right?
013a 7y ago
A typical VC fund's portfolio has a lifespan of 8-12 years. This is the amount of time the venture principals have told their investors that, after which, they'll start realizing the value of the portfolio. Funds typically have multiple portfolios active concurrently, and additional investors may come in throughout the initial stages of a fund (couple years). There isn't any way around this: at the end of the day, VCs want a return in about a decade. That's their window. They absolutely will sacrifice the long-term success of a company in order to attain a positive return within that decade, because that's when their investors want to see a return. What most people don't realize is that VCs are, usually, just middlemen. Maybe a firm is started by someone hyper-rich, but even in cases like this, they're taking in external money from dozens of sources to build these checks they write to founders. Of course, they're not evil. In everyone's ideal world, they can see a return in their window and the business can go on to be sustainable and amazing. But the world isn't sunshine and rainbows; if they have to choose between "maybe successful in 20 years" or "sell it and break even", they're going to force a sale (if they can). I've seen it happen first-hand about three times (though, in these cases I witnessed and many I'm sure: the businesses had become "zombie startups" and likely wouldn't have seen substantial growth even with more funding. an early exit was the best outcome for everyone involved. But, in one of them at least, the CEO was pretty angry at them.)
- babesh 7y ago
  Different motivations AND different evaluations of the company and market between the VCs and the founders. Also different risks and rewards for the VC and the founders. Sometimes the VC thinks that the market the startup is in is a bubble and the VC will push for growth over long term health. Sometimes the VC is right and sometimes they are wrong. I've seen this play out where the VC pushed for growth probably to get acquired. The VC may have been mostly right since the market was a bubble that popped. One competitor was able to pivot though and ended up with 4X. Most competitors failed. Perhaps the VC wanted the money or perhaps the VC didn't believe in the founders. Sometimes the startup has no market and then the VC may push for actions that lead to acquisition. Sometimes the founders demand additional incentives in the acquisition. I've seen this play out since the VCs probably at best break even and want to wash their hands and the founders threaten to stop the deal since they lost out on salary and stock founding the company.

deleted 7y ago

[deleted]

taneq 7y ago

Well yeah, but if they can’t have a unicorn then they’ll advise you to staple a horn on your horse rather than investing in a stable and some oats.

hinkley 7y ago

What people want and the steps they take to get that are often not in agreement. It's hardest to achieve something when you ask people to give you something that is at odds with that goal, which is basically a long running complaint about the entire VC business. If occasionally they get a fast growth enduring company it could be luck or a stronger personality on the other side of the table as much as by any action of theirs. You manage what you measure and what they measure most is growth, not endurance. Half the time when I push for endurance at my place of work I feel like some sort of freedom fighter, subverting a system that wants - no, demands - something very different from me. I could tell you that I want to find is a company that grew somewhat organically that has a big growth opportunity, but that would be a lie, because I don't want lottery tickets anymore. I just want to work on something a lot of people have a positive experience with and we make an honest living at. What I mostly find is companies that think if they can just grow all their problems will be solved. And they have VCs that tell them the same thing. The only people who are telling them differently are people who aren't courageous enough to go into business for themselves, or who they've never heard of because they're not a Unicorn. And who listens to those people, right?

013a 7y ago

A typical VC fund's portfolio has a lifespan of 8-12 years. This is the amount of time the venture principals have told their investors that, after which, they'll start realizing the value of the portfolio. Funds typically have multiple portfolios active concurrently, and additional investors may come in throughout the initial stages of a fund (couple years). There isn't any way around this: at the end of the day, VCs want a return in about a decade. That's their window. They absolutely will sacrifice the long-term success of a company in order to attain a positive return within that decade, because that's when their investors want to see a return. What most people don't realize is that VCs are, usually, just middlemen. Maybe a firm is started by someone hyper-rich, but even in cases like this, they're taking in external money from dozens of sources to build these checks they write to founders. Of course, they're not evil. In everyone's ideal world, they can see a return in their window and the business can go on to be sustainable and amazing. But the world isn't sunshine and rainbows; if they have to choose between "maybe successful in 20 years" or "sell it and break even", they're going to force a sale (if they can). I've seen it happen first-hand about three times (though, in these cases I witnessed and many I'm sure: the businesses had become "zombie startups" and likely wouldn't have seen substantial growth even with more funding. an early exit was the best outcome for everyone involved. But, in one of them at least, the CEO was pretty angry at them.)

babesh 7y ago
Different motivations AND different evaluations of the company and market between the VCs and the founders. Also different risks and rewards for the VC and the founders. Sometimes the VC thinks that the market the startup is in is a bubble and the VC will push for growth over long term health. Sometimes the VC is right and sometimes they are wrong. I've seen this play out where the VC pushed for growth probably to get acquired. The VC may have been mostly right since the market was a bubble that popped. One competitor was able to pivot though and ended up with 4X. Most competitors failed. Perhaps the VC wanted the money or perhaps the VC didn't believe in the founders. Sometimes the startup has no market and then the VC may push for actions that lead to acquisition. Sometimes the founders demand additional incentives in the acquisition. I've seen this play out since the VCs probably at best break even and want to wash their hands and the founders threaten to stop the deal since they lost out on salary and stock founding the company.