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> The challenge is to find a VC who can improve your valuation by more than the percentage they take. And considering that their IRR's are negative (they're no

> The challenge is to find a VC who can improve your valuation by more than the percentage they take. And considering that their IRR's are negative (they're not even making money for their limiteds), which VCs would that be?

pg 15y ago
You're wrong about that too. A lot of VCs don't make money but the top VCs (including Sequoia) certainly do.
- jpdoctor 15y ago
  I had forgotten that Sequoia terminated UCal from their funds for disclosing their returns. http://www.universityofcalifornia.edu/news/article/9917 http://www.universityofcalifornia.edu/news/article/9917
niccolop 15y ago
On Sequoia's Linkedin investment: "Sequoia Capital, the earliest venture capital investor, are not selling any of their stakes of 21 per cent. Sequoia had paid $4.7m for its stake, now worth some $1.5bn." Source: http://www.ft.com/cms/s/2/ded6de58-0fe4-11e1-a36b-00144feabdc0.html#ixzz1oYbXpeBd http://www.ft.com/cms/s/2/ded6de58-0fe4-11e1-a36b-00144feabd...
jfarmer 15y ago
You don't know what you're talking about. Few if any of Sequoia's funds have ever had a negative IRR, as far as I recall. Their record is unparalleled, really.
- jpdoctor 15y ago
  We look forward to your table of % returns. Edit: Sorry jfarmer, it doesn't let me reply below. As far as never having seen negative IRRs, this is old but is out in the open http://www.matrixpartners.com/site/press_detail/63/ http://www.matrixpartners.com/site/press_detail/63/
  - jfarmer 15y ago
    shrug You don't have to believe me. It's no skin off my back. But as you say, you don't have access to that information. Looking at the people who have responded to this thread, I see at least three people who do. So, maybe check yourself? Wovon man nicht sprechen kann... Out of curiosity, have you ever raised outside capital before?
  - jfarmer 15y ago
    Fair enough. But note that article is from 2004, and it's talking mostly about funds raised post-1999, i.e., immediately before the dot-com crash. If you were sincerely interrogating the data, you'd ask yourself how Sequoia faired relative to other funds and asset classes in that same time period. For example, did it still beat the stock market? You'd also admit that 2004 is right when the "internet sector" saw a huge upswing. Facebook (2004). YouTube (2005). Yelp (2004). Instead it's clear you're just trying to find data to prove your inane point. Anyhow, this is really pointless. Enjoy the feeling of internet vindication.
- rdl 15y ago
  From the entrepreneur's side, or from society's, who cares? (I agree Sequoia, Benchmark, Accel, and a few others are ballers, and I'd love to someday be an LP in a few, but that's not really what we're discussing.) If a fund has a way to raise money steadily based on past reputation, market irrationality, a large collection of compromising photographs of leaders of oil producing countries, or whatever, and invests that money in a bunch of bad-investment startups but also my going-to-be-successful startup, it's a win for me and my users. And those "bad investment startups" might actually be amazing companies, producing wonderful products which make the world better -- just at a really high valuation. There is surely some price at which a good company is a bad investment. Maybe there's an argument for sustainability, but that's more over the long term. In 1999, or if you believe 2007 or now is an overpriced period for startup valuations, it still makes sense to raise VC if it will help your business, even if it doesn't make a risk-weighted great return for the VC. I don't believe this is the case now, but it's irrelevant to the argument of whether a startup should take VC.

pg 15y ago

You're wrong about that too. A lot of VCs don't make money but the top VCs (including Sequoia) certainly do.

jpdoctor 15y ago
I had forgotten that Sequoia terminated UCal from their funds for disclosing their returns. http://www.universityofcalifornia.edu/news/article/9917 http://www.universityofcalifornia.edu/news/article/9917

niccolop 15y ago

On Sequoia's Linkedin investment: "Sequoia Capital, the earliest venture capital investor, are not selling any of their stakes of 21 per cent. Sequoia had paid $4.7m for its stake, now worth some $1.5bn." Source: http://www.ft.com/cms/s/2/ded6de58-0fe4-11e1-a36b-00144feabdc0.html#ixzz1oYbXpeBd http://www.ft.com/cms/s/2/ded6de58-0fe4-11e1-a36b-00144feabd...

jfarmer 15y ago

You don't know what you're talking about. Few if any of Sequoia's funds have ever had a negative IRR, as far as I recall. Their record is unparalleled, really.

jpdoctor 15y ago
We look forward to your table of % returns. Edit: Sorry jfarmer, it doesn't let me reply below. As far as never having seen negative IRRs, this is old but is out in the open http://www.matrixpartners.com/site/press_detail/63/ http://www.matrixpartners.com/site/press_detail/63/
- jfarmer 15y ago
  shrug You don't have to believe me. It's no skin off my back. But as you say, you don't have access to that information. Looking at the people who have responded to this thread, I see at least three people who do. So, maybe check yourself? Wovon man nicht sprechen kann... Out of curiosity, have you ever raised outside capital before?
- jfarmer 15y ago
  Fair enough. But note that article is from 2004, and it's talking mostly about funds raised post-1999, i.e., immediately before the dot-com crash. If you were sincerely interrogating the data, you'd ask yourself how Sequoia faired relative to other funds and asset classes in that same time period. For example, did it still beat the stock market? You'd also admit that 2004 is right when the "internet sector" saw a huge upswing. Facebook (2004). YouTube (2005). Yelp (2004). Instead it's clear you're just trying to find data to prove your inane point. Anyhow, this is really pointless. Enjoy the feeling of internet vindication.
rdl 15y ago
From the entrepreneur's side, or from society's, who cares? (I agree Sequoia, Benchmark, Accel, and a few others are ballers, and I'd love to someday be an LP in a few, but that's not really what we're discussing.) If a fund has a way to raise money steadily based on past reputation, market irrationality, a large collection of compromising photographs of leaders of oil producing countries, or whatever, and invests that money in a bunch of bad-investment startups but also my going-to-be-successful startup, it's a win for me and my users. And those "bad investment startups" might actually be amazing companies, producing wonderful products which make the world better -- just at a really high valuation. There is surely some price at which a good company is a bad investment. Maybe there's an argument for sustainability, but that's more over the long term. In 1999, or if you believe 2007 or now is an overpriced period for startup valuations, it still makes sense to raise VC if it will help your business, even if it doesn't make a risk-weighted great return for the VC. I don't believe this is the case now, but it's irrelevant to the argument of whether a startup should take VC.