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It's hard to do better than the most successful businesses is not a statement that makes sense from the investor's perspective. The price of an investment is b
by staticman2 2y ago
It's hard to do better than the most successful businesses is not a statement that makes sense from the investor's perspective.
The price of an investment is based on the expected profitability of a company, an investment in a barely profitable company, if priced correctly, should yield returns at least equal to good companies like Apple, Google, and Microsoft, as the investment would be discounted to compensate for the poor expected future earnings of the company you are investing in.
- eropple 2y agoThat's getting into perfectly-spherical-cow territory, though. Investors aren't logical and neither are founders, and there's a real chance that an investor-fair deal isn't going to get any bites. The BATNA for most founders who don't secure funding is "go get a job that pays a lot of money"; while most VC investment is lopsided in the investor's favor through other means (equity preferences etc.), not landing deals makes your fund's LPs ask why they're letting you hold their bag of cash.
- devoutsalsa 2y agoOne could argue that illogical investing is called speculation or gambling.
- eropple 2y agoOne indeed could. Excuse me while I channel Kermit the Frog and take a long sip of my tea.