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Yes, in the end the VC with the winner is going to win, but that's beside the point even if there is a single winner in the world (which in reality is obviously
by jules 14y ago
Yes, in the end the VC with the winner is going to win, but that's beside the point even if there is a single winner in the world (which in reality is obviously not true, there are not dozens but hundreds of huge ROI winners). The point is that you don't know the winner beforehand. A VC who is getting 2*x% equity for $y is expected to perform twice as good as one that is getting x% for $y. The arguments that are being made here are incredibly vague. I'd love to see an argument based on solid logic why valuation doesn't matter much. I'm sure PG is right, but I'd like to understand why.
- johnrob 14y agoThe point of this whole debate is this: VC return = equity * performance. Optimizing for the former is much less leveraged than the latter, since performance can vary by 10000x. If asking for better terms means you lose out on any deals then doing so is probably not in the firm's best interest.
- ecuzzillo 14y agoTrying to maximize your share of individual deals causes you to lose the best deals. This is because a) the best deals are often expensive, and b) maximizing your share empirically causes people to consider you a dick, and people with reputations for being dicks don't get chosen by the best startups.
- pmarca 14y agoIt's not the same equity. Quality is not distributed equally among the sample set of companies. The great startups (as judged retroactively via returns -- e.g. Facebook and Google) often (but not always) can get multiple competitive offers from top-tier venture firms, so having some abstract theory about how you're going to only pay low prices significantly damages your opportunity to invest in the companies that are going to generate all the returns.