4 ms·
> Then they would talk about LOI, ROI, NDAs, IPOs, and all kinds of things that also had nothing to do with actually helping people. Coming from a bootstrap ba
by themanmaran 5y ago
> Then they would talk about LOI, ROI, NDAs, IPOs, and all kinds of things that also had nothing to do with actually helping people.
Coming from a bootstrap background, I feel that VC backed companies have a tendency to focus way too much on vanity metrics. KPIs that make the buisness look successful, without measuring real conversions. It's like building a business purely to make a nicer looking pitch deck.
That, plus way too much emphasis on the financial/equity structure of the startup. Founders are carving out employee option pools before making their first dollar. And this focus on equity/investment/reporting becomes the CEO's full time job, when it should have been dedicated to customers.
- micromacrofoot 5y agoThat's because VCs need an exit to make their money. They only care if the business is successful insofar that it can be sold or IPO.
- exdsq 5y agoCan VCs not profit share to hedge their bets to get an X multiple on their investment back too? Sure some won't be profitable but if I was to invest I'd want some way of recouping my investment back over time and then the upside of a sale/IPO.
- micromacrofoot 5y agoGenerally it's not something VCs are interested in. I'm not an expert so I might not be clear on the why... but as far as I know it only really makes sense to seek out an arrangement like that on smaller investments under <$1mil. Even on a small investment you'd probably be lucky to see a 2-3X return in 5 years.
- picardo 5y ago> VC backed companies have a tendency to focus way too much on vanity metrics. Well-run companies focus on the right metrics. Badly run companies focus on vanity metrics. There is some of both everywhere in the business world, not just among VC backed companies.