4 ms·
It's admirable to make tough choices and try to return as much as possible to your investors even when the prospects of a big payday are slim; and to keep tryin
by RockyMcNuts 14y ago
It's admirable to make tough choices and try to return as much as possible to your investors even when the prospects of a big payday are slim; and to keep trying to change the world and achieve your vision even if it eludes you for a long time; and to stand by your customers and employees who believe in that vision.
Less admirable to jump ship from a going concern because there's no rocket ship payday and let the VC and everyone else try to salvage as much as possible.
Think about something like Next... was a struggle and had to be scaled back... Steve Jobs could have just let it go and moved on to the next big thing.
- derefr 14y agoA VC makes their money on the few times they win, and it more than makes up for all the companies that lose completey. Just barely making back their investment is no better for them than returning nothing at all. (In fact, they could be putting the money into market securities with risk equal to your company's likelihood of return, so you have to give them [that same risk multiplier] * [their original investment] or they lose money, even if you give a "positive return.") A VC would much rather give you 1mil five times and have you kill four of those companies and make a 100x return on the fifth one. Sitting around forever on the first one trying to eek out a 2x return means you never build the fifth one, and that's a much lower aggregate return.