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I believe your last paragraph illuminates the answer: how does a fund with $100M to invest come up with the sales funnel to generate 100 $1M quality deals? You
by svnt 4y ago
I believe your last paragraph illuminates the answer: how does a fund with $100M to invest come up with the sales funnel to generate 100 $1M quality deals? You arguably have to do the same amount of work per deal (let’s be generous and say somehow it is 1/2) and your profit is 1/100. So your costs/workload are 50 times higher.
(edit: looking back at this I believe I’m not even being pessimistic enough, but I’m too lazy to do the math. We’ve got 5% of 5% sorts of things going on here. So using these numbers to fill your funnel you need 400 initial meetings for one big deal, or 40,000 initial meetings for 100 small deals. That’s one person vs 100 people on payroll. But with small deals you have higher people noise and so you probably need more stages in your funnel and specialization. So it’s probably much worse.)
Then you have to engage with the company, take a board seat, etc. Only way it pans out operationally is if you can still succeed while being really passive (hasn’t worked yet) or automate it. But if you automate it people will know it is automated and game it.
- lifeisstillgood 4y agoI have seriously suggested that there should be a "million startups" fund - I think it was when softbank lost X billions and I reckoned it was feasible to fund a million YC style / cost companies globally. Yeah it's not viable in SV but there are a lot of cities outside USA. Do all of the problems you allude to there exist - yes absolutely. But we need something to spin the flywheel. There is a story that inspires me is https://en.m.wikipedia.org/wiki/Arunachalam_Muruganantham https://en.m.wikipedia.org/wiki/Arunachalam_Muruganantham - he invented a low cost tampon making machine - it was not the technology but the marrying of tech, social entrepreneur and local cultural knowledge that increased wealth - and that's the next stage - we don't need another social media giant - we need thousands of locally useful social media (for definitions of local, social, useful etc) And finally to be brutal - if some fund has 100M to invest and it's too tough to build out their deal funnel, no one is going to sympathise :-(
- raybb 4y agoWow that is a great story. I learned about social enterprises a few years ago and since have been collecting related resources and putting them here https://github.com/RayBB/awesome-social-enterprise https://github.com/RayBB/awesome-social-enterprise