4 ms·

Really bugs me the kind of ideas that getting funding. Some of us have viable businesses that need funds to scale but just don't have the right pedigree.

dsl 13y ago
If you really need funds to scale you should be looking at business loans and financing, not venture capital. Talk to banks, show them your books, provide receipts, let them talk to a few customers, and you'll have 12 to 24 months growth money out the door no problem. Unless you are using the word "scale" to mean prove your business model, then yeah, your hat is in the same ring as all sorts of harebrained ideas.
gcb0 13y ago
pretty sure it was acquihire
pbiggar 13y ago
It seems you're implying that VCs - people who invest money for a living - care more about pedigree than profit. Now I don't mean to imply anything about yourself or your business, but is it possible there might be a different and perhaps simpler explanation for whatever you're bugged about?
- pppppowerbook 13y ago
  He didn't imply that at all; if M&A execs also care more about pedigree, then pedigree is a great way to drive a VC exit, especially compared to building a business that actually makes a profit.
  - pbiggar 13y ago
    Acquihires dont move the needle for VCs.
    - pppppowerbook 13y ago
      Depends on what you call an acquihire.
    - 001sky 13y ago
      That's like saying F's don't impact your GPA. The reality is that returning capital does materially impact returns. The median VC is in an asset class whose returns are pretty poor.
      - pbiggar 13y ago
        I think you're saying that they move the needle down? That's not how it works: only the returned money counts, so if you return none, or only a little, the needle doesn't move up.
        001sky 13y ago
        Its called return <on investment>, so yes it matters. Absolute returns are fine, but force lager returns from winners to compensate for zeros when measured on an ROI basis. And all VC's are marketed on ROI, not absolute returns (for obvious reasons).
        pbiggar 13y ago
        ROI is based on absolute returns. But more importantly, they gain actual dollar amounts from a sale. If they invest $3.5m from their $200m fund, and it returns $5m, they could care less. They're looking for the company that returns $50m or $350m. The post I was responding to was saying that VCs were motivated by acquihires ("a great way to drive a VC exit"). Debating the semantics of needles and ROIs is pointless. VCs are unmotivated by small gains and small businesses, and wont even invest in a company that can't promise to be valued above $100m one day.
        001sky 13y ago
        Your making silly assumpyions about VCs and how they operate, ones that you can't justify. An easy exit that returns 20-45% on a 1-2 year investment is a no-brainer if the only other option is going to zero in a time-wasting pain-in-the-ass situation. That is quite distinct from saying that this "ideal" investment sold to LPs. And its quite distinct from rational "binary bets". While VCs screen based upon threshold potential returns, the probability of being a 10x company <even after passing the screen> is order of magitude <10%. So, its silly to say that all vc exits are large exits. But since exits have more prestige than chapter 7s, disquising your failures as exits has <value>. If you can do this with non-dilutive financial returns, you a strategy that may be better than the alternative/s.
- namenotrequired 13y ago
  He implied VCs care more about pedigree than about the idea.
  - pbiggar 13y ago
    I implied that it was much more likely that his idea/company/metrics/space/personality/etc was the problem. VCs are motivated by money - they'll look past all sorts of other things, including pedigree, if they feel they will make a great return.
vidarh 13y ago
Having dealt with a dozen or so VC's in multiple startups and seen how they're working, I have a terribly hard time picturing what not "having the right pedigree" might look like. While there are certainly the odd investor that may be swayed by superficial factors, there are many more that generally are not. Assuming you're a reasonably normal person with no severe personality defects or problems with hygiene to put people off from the outset, it is likely that you are simply targeting the wrong VCs for your type of business, are not pitching it right, or your business is simply not as great from a VC perspective as you believe it might be (which does not necessarily mean it can't be a great business for you - but a VC will be looking for high returns fast, and that excludes a lot of businesses that still provide people with a nice living). Find our where your local startup people can be found (user groups, meetups etc.), and approach some to get a frank outside view of your business and pitch from someone who have themselves gotten VC funding - you might be surprised where it is you're falling down, and it could very well be trivial if you're lucky.
- mbesto 13y ago
  > it is likely that you are simply targeting the wrong VCs for your type of business, are not pitching it right I think we've found the problem. I believe there is a disconnect between founders who have the ability to pitch and those who have the ability to grow a business.

dsl 13y ago

If you really need funds to scale you should be looking at business loans and financing, not venture capital. Talk to banks, show them your books, provide receipts, let them talk to a few customers, and you'll have 12 to 24 months growth money out the door no problem. Unless you are using the word "scale" to mean prove your business model, then yeah, your hat is in the same ring as all sorts of harebrained ideas.

gcb0 13y ago

pretty sure it was acquihire

pbiggar 13y ago

It seems you're implying that VCs - people who invest money for a living - care more about pedigree than profit. Now I don't mean to imply anything about yourself or your business, but is it possible there might be a different and perhaps simpler explanation for whatever you're bugged about?

pppppowerbook 13y ago
He didn't imply that at all; if M&A execs also care more about pedigree, then pedigree is a great way to drive a VC exit, especially compared to building a business that actually makes a profit.
- pbiggar 13y ago
  Acquihires dont move the needle for VCs.
  - pppppowerbook 13y ago
    Depends on what you call an acquihire.
  - 001sky 13y ago
    That's like saying F's don't impact your GPA. The reality is that returning capital does materially impact returns. The median VC is in an asset class whose returns are pretty poor.
    - pbiggar 13y ago
      I think you're saying that they move the needle down? That's not how it works: only the returned money counts, so if you return none, or only a little, the needle doesn't move up.
      - 001sky 13y ago
        Its called return <on investment>, so yes it matters. Absolute returns are fine, but force lager returns from winners to compensate for zeros when measured on an ROI basis. And all VC's are marketed on ROI, not absolute returns (for obvious reasons).
        pbiggar 13y ago
        ROI is based on absolute returns. But more importantly, they gain actual dollar amounts from a sale. If they invest $3.5m from their $200m fund, and it returns $5m, they could care less. They're looking for the company that returns $50m or $350m. The post I was responding to was saying that VCs were motivated by acquihires ("a great way to drive a VC exit"). Debating the semantics of needles and ROIs is pointless. VCs are unmotivated by small gains and small businesses, and wont even invest in a company that can't promise to be valued above $100m one day.
        001sky 13y ago
        Your making silly assumpyions about VCs and how they operate, ones that you can't justify. An easy exit that returns 20-45% on a 1-2 year investment is a no-brainer if the only other option is going to zero in a time-wasting pain-in-the-ass situation. That is quite distinct from saying that this "ideal" investment sold to LPs. And its quite distinct from rational "binary bets". While VCs screen based upon threshold potential returns, the probability of being a 10x company <even after passing the screen> is order of magitude <10%. So, its silly to say that all vc exits are large exits. But since exits have more prestige than chapter 7s, disquising your failures as exits has <value>. If you can do this with non-dilutive financial returns, you a strategy that may be better than the alternative/s.
namenotrequired 13y ago
He implied VCs care more about pedigree than about the idea.
- pbiggar 13y ago
  I implied that it was much more likely that his idea/company/metrics/space/personality/etc was the problem. VCs are motivated by money - they'll look past all sorts of other things, including pedigree, if they feel they will make a great return.

vidarh 13y ago

Having dealt with a dozen or so VC's in multiple startups and seen how they're working, I have a terribly hard time picturing what not "having the right pedigree" might look like. While there are certainly the odd investor that may be swayed by superficial factors, there are many more that generally are not. Assuming you're a reasonably normal person with no severe personality defects or problems with hygiene to put people off from the outset, it is likely that you are simply targeting the wrong VCs for your type of business, are not pitching it right, or your business is simply not as great from a VC perspective as you believe it might be (which does not necessarily mean it can't be a great business for you - but a VC will be looking for high returns fast, and that excludes a lot of businesses that still provide people with a nice living). Find our where your local startup people can be found (user groups, meetups etc.), and approach some to get a frank outside view of your business and pitch from someone who have themselves gotten VC funding - you might be surprised where it is you're falling down, and it could very well be trivial if you're lucky.

mbesto 13y ago
> it is likely that you are simply targeting the wrong VCs for your type of business, are not pitching it right I think we've found the problem. I believe there is a disconnect between founders who have the ability to pitch and those who have the ability to grow a business.