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You just have to frame it accordingly. If you go to a VC and boast about an exit of hundreds of thousands as if it's be a success to the., that may give a VC pa
by vidarh 3y ago
You just have to frame it accordingly. If you go to a VC and boast about an exit of hundreds of thousands as if it's be a success to the., that may give a VC pause, because it's be a failure to them. Failure doesn't bother VCs so much as failure to understand that an exit that size isn't what success looks like to them. It's fine to say it was success to you at that point.
But if that is what you want this time too, a VC is wrong for you. If you want a VC investment, you need them to understand you want a big exit this time.
I used to work at a VC, and one of the most frequent reasons we didn't take pitches forward was founders who presented a great pitch that fit what you described.
We rejected them because while it'd be entirely rational for them to want to take an exit that'd make them happy, those goals are fundamentally incompatible with a VC funds risk profile.
Consider that most VC funds invest in high risk startups, and so most of their investments fail. For that reason you need a portion of the survivors to give massive returns. Then it's irrational to cap your potential upside return from the companies that become successful enough to have a shot at providing those returns.
This isn't just greed, but survival: most VCs fail to raise a second fund because they either fail to even return the capital or return too low returns to be worth it. You set yourself up for failure if you put your money in a high risk startups where the founder promises you that your best possible return will be, say, 5x.
And so if you as a founder want "well defined, limited", VC capital isn't for you, and that's fine. There are other investors.
- earthling8118 3y agoSo they choose to invest in high risk scenarios and as a result it becomes a matter of survival, and you're claiming that greed isn't involved? Is that not the reason to invest in high risk as opposed to low risk?