4 ms·

If I got it correctly, I wondered the same. Why not an investor would pay me to me and the other co-founder our salary for X months (12 months?) for the Y% of t

• michaelochurch 13y ago
  VCs want the high burn rate because it means that the company moves to finality (liquidity or failure) quickly and gets off the books in time. They're not in the business of building long-lived healthy companies, even though that's something the world sorely needs.
  • lsc 13y ago
    >They're not in the business of building long-lived healthy companies, even though that's something the world sorely needs. That's the thing, though; being a long-lived, healthy company is much easier if you have one person who unambiguously owns it (and that person is also the top operational manager.) That's the thing, what kills a web startup? the owner deciding to get a real job. If you have two owners? now rather than having one person who will kill the company if they get a real job, you have two. I'm not saying absolutely that it's an unsolvable problem; if the person who loses interest early gives most of the ownership to the remaining partner, I suppose it could work out? but I'm not sure how that would or even should work.
• vecter 13y ago
  VCs raise funds from LPs that typically range from the hundreds of millions to single digit billions. They need to return money on those huge funds, which means they care more about absolute returns than a large percentage return. In other words, given the choice to invest $10M and get back $50M or invest $100M and get back $200M, they'd definitely prefer the second deal (assuming equal risk).