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VCs aren’t your friends

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Re: VCs aren’t your friends

#101

Post by jb1991 »

shermozle wrote: post #62
dmurray wrote: post #30

Earlier quoted context omitted.

I'd say Jobs would have blown them away. He was a businessman and an obsessive who knew when to focus on the design versus the product versus the money. If investors in his era wanted a perfect pitch deck, his pitch deck would have been perfect. Tesla might have been more likely to focus on having the tech working at the expense of everything else.

> I'd say Jobs would have blown them away. If nothing else, the stench would have blown them away. He didn't bathe for _years_.

What a ridiculous exaggeration.

Re: VCs aren’t your friends

#102

Post by rrr_oh_man »

knifie_spoonie wrote: post #99
mef wrote: post #73

Earlier quoted context omitted.

consider that this is sending a negative signal to the VC that other VCs have already passed, rather than that it hurts their feelings

> other VCs have already passed Is this really a sensible factor to consider? Canva's was founder was rejected 100 times before someone took a chance. Is there any hard evidence that founders who secure funding earlier are more likely to provide a VC with a successful exit?

"Nobody ever got fired for hiring IBM"

--> GP's point was: You need to look good while losing all your LP's money.

Re: VCs aren’t your friends

#103

Post by LysPJ »

Negitivefrags wrote: post #100
tomp wrote: post #88

Earlier quoted context omitted.

This doesn't make sense. I worked in hedge funds, even there the management fee (2%) covers the fixed costs (legal, trading operations, treasury, IT operations, etc.) whereas the performance fee (20%) incentivises the alpha. In VC it's even worse, because at least hedge funds are liquid . VC investments don't realize their value for 5-10 years! Are they supposed to work for free for 10 years? Even the support staff?

If they have fixed costs, why is it a percentage based fee? Why not just be upfront with a fixed dollar value per year of fees for that part?

Fees such as trading costs are a percentage of trading volume.

Therefore, the more money you are managing, the higher your trading costs. (i.e those costs are "fixed" but its a "fixed percentage" rather than a static number.)

Re: VCs aren’t your friends

#104

Post by saberience »

leashless wrote: post #95
saberience wrote: post #92

Earlier quoted context omitted.

This is nonsense... VCs have a whole staff of people needed to do business and a ton of costs. There's a legal team, marketing/events, human resources, finance, some executive assistants. Screening, meeting founders, traveling to meet founders, takes up a TON of time and obviously most of the time, no investments are made! Also don't forget, VCs have an office, usually not in a cheap place, so lease costs, cleaning c…

As noted, the VC would raise capital like any other business to cover its operating costs. Think about why they don’t do that.

They already do that... they raise funds from LPs which include a fee which covers the costs. And it works fine, LPs repeatedly invest in the same firms which they wouldn't do if they thought it was a bad deal. There are firms which have been investing for 20-30 years with the same LPs. If the business model wasn't working it would have failed and the VC firm would have closed a long time ago.

Re: VCs aren’t your friends

#105

Post by saberience »

kreck wrote: post #93

Just an anecdote (no judgement here; VC has its place): An acquaintance of mine who works for a VC firm once said "Ultimately, VC money is a loan for people who are not bankable". That really resonated with me as with that perspective I understood why behavior & practices are closer to what you'd experience if you personally need to take out a loan outside of the regulated banking system

The whole "hate VCs" thing is kind of silly in my opinion. VC wouldn't exist if founders didn't want and need capital and have no other way of getting it.

Also, for every other "evil VC" story, there are other stories where founders are really happy with their VC board members, have a strong and positive relationship with their VC partners, and end up getting some kind of positive exit which wouldn't have happened at all without the investment.

Sure, some VC companies may be shitty, some others may be amazing, but this is basically like everything in life. Some schools are shitty, some cops are shitty, some cars, tech companies, managers etc, are shitty. But some of all these things can also be great and awesome too. Thats life.

Re: VCs aren’t your friends

#107

Post by knifie_spoonie »

rrr_oh_man wrote: post #102
knifie_spoonie wrote: post #99

Earlier quoted context omitted.

> other VCs have already passed Is this really a sensible factor to consider? Canva's was founder was rejected 100 times before someone took a chance. Is there any hard evidence that founders who secure funding earlier are more likely to provide a VC with a successful exit?

"Nobody ever got fired for hiring IBM" --> GP's point was: You need to look good while losing all your LP's money.

Fair point. If that's the signal who the people financing the VC believe in, then I guess it makes sense them to follow along.

Re: VCs aren’t your friends

#108

Post by jorvi »

keiferski wrote: post #21

The way VCs filter out potential investments seems fairly similar to the way Ivy League schools filter out potential students. (Probably because they are comprised of the same people.) It is not really about technical brilliance, or innovation, or anything that is written on their website as a core value. It's more about whether you're smart enough and can follow instructions and fit into the overarching institutiona…

> can't imagine someone like Steve Jobs or Nikola Tesla passing these VC/Ivy League kinds of tests.

My "favorite" "test" is the one more for soft studies (think law or public policy) rather than STEM: for example UN internships typically have no compensation and they often require you to relocate to extremely expensive CoL areas, meaning there is an automatic filter built in where only children of very well-off parents can do these kinds of internships and segue into the jobs connected to them.

Re: VCs aren’t your friends

#109

Post by notahacker »

scotty79 wrote: post #55
moralestapia wrote: post #19

Earlier quoted context omitted.

It's orders of magnitude off. The guy is just LARPing poorly, even lacking common sense. One single OpenAI-tier deal every two years, consistently, would put you into Legendary VC territory.

I think he meant that they seem as exciting as OpenAI to investors. Not that all of them (or any) succeed. You can bet on all 10% potential OpenAIs of the future and still loose all your bets.

Still feels way off. If VCs receive 1-5 pitches per week that seem as exciting to them as OpenAI, they'd spread their money around a lot more startups. Don't think they're that excited by half the "solid metrics, good founders, there's plenty of money in generic B2B SaaS if we throw enough at the sales team" stuff they actually invest in.

Now I can believe that at least 10% of the pitchdecks they receive are "we hook $industry up to OpenAI's API"...

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