This analysis makes a few assumptions which are wrong. The consideration of 20% VC back startup success rate is an pure investment analysis. This is the conside

This analysis makes a few assumptions which are wrong. The consideration of 20% VC back startup success rate is an pure investment analysis. This is the consideration if you are Sequoia, not if you are the founder. As a founder you have far more intimate understating of your company and would be far better positioned to determine what the probability of success is. While founders may seem overly optimistic, they are not a stupid bunch and should be able to make objective analyses, especially if they were able to build a company that has attracted VCs. So if you change the 20% success probability to 35% based on the founders understanding, the risk adjusted return would be 852K. Additionally a 10% probability of selling at $10 million would increase the founder’s share by another 500k on top of the 852K. For these reasons the author is simply wrong in his financial analysis. Statistical averages are inappropriate for one off situational analysis. Why would a founder use the 20% industry average success rate when they would be far more informed than an outside investor? Additionally an entrepreneur has other considerations such as ability to start another valuable company, how much they enjoy the work, if they are in a new technology space and have a 0.1% chance of building a billion dollar company, or the social perception for a CEO of a startup. These are considerations that a VC does not really care about and will not model. The author sounds more like a VC making a routine investment analysis than an entrepreneur that was betting their future trying to build a company that they are passionate about.