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I don't know why "being an entrepreneur" is used interchangeably for "attracting venture capital" so much. Solo entrpreneurs might have more difficulties attrac

I don't know why "being an entrepreneur" is used interchangeably for "attracting venture capital" so much. Solo entrpreneurs might have more difficulties attracting VC, but it's generally much easier for them to sort out their issues in a growing company. How many startups have blown up because some co-founders left / changed their minds / caused conflicts?

david927 14y ago
This is an important point that's lost on a lot of people. Raising capital and building a great product are two separate actions -- and being good at one means nothing to the other. It's especially important to note, because raising capital means fitting investors' checklists, which in some ways will always be arbitrary. They don't have a magic formula because there's no magic formula to have. So that leaves a large number of "moneyball" companies, which like Jeremy Lin, weren't given a fair shot because they didn't have "the look" (sole founder, female founder, etc.). And if you fit in that group and haven't received funding, don't change yourself to fit the mold, show your greatness and leave the mold in pieces.
- hodder 14y ago
  I agree with your point completely. However, on the magic formula bit, I do highly reccomend beginning investors read Joel Greenblatt's book,"The Little Book that Beats the Market", in which he outlines the "magic formula". www.magicformulainvesting.com is the associated website with it. The magic formula basically sorts the US public investing universe by return on capital (EBIT / (net fixed assets + working capital) ), and earnings yield (EBIT/ EV). I do believe following the formula will likely outperform the S&P500 if your time horizon exceeds 3-5 years. Same goes for most proven value strategies, such as buying baskets of low P/E, low P/B, high piotrosky f-score, or net-net baskets.
loceng 14y ago
Agreed. Also understand VCs are marketing what works best for them and what they see working for them - mainly so they can attract those people making their job easier. They're creating a bit of a facade for themselves that risk will be less; It's true though that 2 people can get more than 2x the work done than 1 person can, though a single person managing other people well - it just happens at the smaller budget size of startups the cost of an added profit margin that gets added on (plus other difficulties that arise) to outsourced labour, can be substantial.
mammalfriend 14y ago
Agreed. And I'm also not sure why building a VC-fundable business is used interchangeably with building a business that rewards the founder(s). I've seen a lot of exits of VC-funded companies where founders received little more than a rich employment package. But the largest return I've seen for a founder was a solo founder who raised no capital at all. Has anyone run the numbers on tech company founder ROI across funding type and amount yet?

david927 14y ago

This is an important point that's lost on a lot of people. Raising capital and building a great product are two separate actions -- and being good at one means nothing to the other. It's especially important to note, because raising capital means fitting investors' checklists, which in some ways will always be arbitrary. They don't have a magic formula because there's no magic formula to have. So that leaves a large number of "moneyball" companies, which like Jeremy Lin, weren't given a fair shot because they didn't have "the look" (sole founder, female founder, etc.). And if you fit in that group and haven't received funding, don't change yourself to fit the mold, show your greatness and leave the mold in pieces.

hodder 14y ago
I agree with your point completely. However, on the magic formula bit, I do highly reccomend beginning investors read Joel Greenblatt's book,"The Little Book that Beats the Market", in which he outlines the "magic formula". www.magicformulainvesting.com is the associated website with it. The magic formula basically sorts the US public investing universe by return on capital (EBIT / (net fixed assets + working capital) ), and earnings yield (EBIT/ EV). I do believe following the formula will likely outperform the S&P500 if your time horizon exceeds 3-5 years. Same goes for most proven value strategies, such as buying baskets of low P/E, low P/B, high piotrosky f-score, or net-net baskets.

loceng 14y ago

Agreed. Also understand VCs are marketing what works best for them and what they see working for them - mainly so they can attract those people making their job easier. They're creating a bit of a facade for themselves that risk will be less; It's true though that 2 people can get more than 2x the work done than 1 person can, though a single person managing other people well - it just happens at the smaller budget size of startups the cost of an added profit margin that gets added on (plus other difficulties that arise) to outsourced labour, can be substantial.

mammalfriend 14y ago

Agreed. And I'm also not sure why building a VC-fundable business is used interchangeably with building a business that rewards the founder(s). I've seen a lot of exits of VC-funded companies where founders received little more than a rich employment package. But the largest return I've seen for a founder was a solo founder who raised no capital at all. Has anyone run the numbers on tech company founder ROI across funding type and amount yet?