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I think the poster is right but, the I have to laugh at statement that VC’s won’t be able to get a 4.5% return on their investment so why bother. VS’s aren’t i
by oceanplexian 4y ago
I think the poster is right but, the I have to laugh at statement that VC’s won’t be able to get a 4.5% return on their investment so why bother.
VS’s aren’t in the game for a 4%, 10%, or even 20% return. They’re investing in startups that have the potential to get something like 1,500% or 5,000% returns on their money and many times, they eventually succeed. Sure raising money in a high interest rate environment will be harder but it doesn’t kill the VC model at all.
- rufus_foreman 4y agoA 5,000% annual return on a million dollars for 10 years is $119,042,423,827,612,787,802,112.
- chewz 4y agoIt is 5000% on single bet out of 100.. And 100% loss on other 96 bets... Which makes VC's return on total capital much smaller then 5000%.. But more important high discount rate means much shorter runway for startups.
- dragonwriter 4y ago> They’re investing in startups that have the potential to get something like 1,500% or 5,000% returns on their money and many times, they eventually succeed And many, many, many more times they fail. The higher the risk-free interest rate, the higher the returns need to be to justify high-risk investment unless, like SBF, you simply eschew risk premiums. But most sane people, even VCs, aren’t that risk insensitive.