> A VC receives 10 to 50 decks per week. Out of those, 10% are hot: think OpenAI. lol.
The 0% interest era did wonders for this economy.
VCs aren’t your friends
161–170 of 383 posts
Re: VCs aren’t your friends
#162In my experience founders that have raised vc regard them as bankers. Founders who haven't successfully raised (for whatever reason) and people that dream about being founders postulate on these things.
Funding is simple. Seed or before you/team are fundable, based on some signal of you've done it or can do it. Post seed, it's not you, it's the business. If in 2 months you haven't gotten interest or intros, you're business is not VC fundable, or you suck at fundraising which means you're probably not the right venture backable CEO.
Re: VCs aren’t your friends
#163Earlier quoted context omitted.
> Remember: if VCs believed in what they were doing they would not take a 2% annual management fee and 20% of the upside. This makes no sense. Companies have fees, junior associates have student loans, buldings require rent to be paid. This is a foolish sentiment, unless you would apply it to all employees everywhere. If startup employees truly believe in their company they would also take no salary at all and just l…
> If startup employees truly believe in their company they would also take no salary at all and just live on ramen noodles. Not if you have no capital -- You still have to eat and be housed and that costs a lot if you don't have family wealth or other income streams, even with a good salary. People also naturally have different levels of risk aversion. Not everyone can/should be putting it all on red every day. > Thi…
> Not if you have no capital -- You still have to eat and be housed and that costs a lot if you don't have family wealth or other income streams, even with a good salary.
That's exactly their point; this exact same logic can be applied to VCs, too.
Re: VCs aren’t your friends
#164The problem with the “signal” is that it’s based on pretty much nothing. It is just as valid or nuts as any other ad hoc random tea leaves & chicken bones “signal” someone decides to come up with a dubious justification for. Whether the deck said March, April, or May changed absolutely nothing about the underlying business and thus also nothing about the actual investment opportunity. Maybe they made the deck two mon…
The deck from March says that they have been sending the deck around since March, and are still looking for investments. It might be meaningful, but would have to measure how quickly the typical funding rounds are made for successful companies, to have an "academic" argument about it. However it doesn't really matter, a VC can invest for whatever reasons he wants.
Also the fact they haven't updated their deck in April/May means they didn't have any huge growth in march/april/may to brag about, or even they had bad march/april/may results that they want to hide
Re: VCs aren’t your friends
#165Let me throw in one other tip for founders looking to get funded: do not ignore regional VCs.
Most of the stories about "how VC works" are 10, 15 years out of date. The cultural "sense of things" lags behind the reality. We found this out the hard way.
In fact, contrary to all expectations and myths, VCs (outside perhaps of the top 50 or 100 firms?) read their emails and take cold meetings.
They have to.
Every region in the world has some clone of Silicon Valley - technical universities and accelerators and incubators and funds - and most of them have very little deal flow or exposure to outside opportunities and ideas. The guy from a second tier French city part-funded by an Economic Development Agency has as much luck getting into a deal with Union Square as you do. But he still has money to invest.
So most of the VCs outside of a small, narrow set do answer emails, are glad to be approached, and are basically glad to see you if you've got anything at all which is interesting to say. It doesn't cost much to try, either. It's the price of an email.
Yes, warm intros to top tier VCs are really handy.
But that's also why the top tier VCs are so massively subject to group think and wind up collectively dropping five billion dollars on electric scooters and stuff like that.
Everybody is human.
Everybody is here to do the deal.
At the top of the chrome towers are men and women in shoes and socks trying to look good to their management. Nothing behind the curtain, no wizard of oz. Do what you can. Don't break yourself for the myths. Do intelligently bet the odds!
Tech is going to be the dominant story in human history for the rest of our lives in almost all scenarios. It's not a bad industry to be in. It's just the financial side of that industry is really heavy on the mythology and maybe that's holding us back now.
Re: VCs aren’t your friends
#166Re: VCs aren’t your friends
#167Earlier quoted context omitted.
VC as an asset class loses money. Within that loss, some companies do better than others. Whether that is skill , luck or finding some way to tilt the board in your favour (political influence for example) depends on who you ask. I have read that the statistics the distribution of success in the VC field was compatible with a random distribution with a very small skill bias. I do not know if that analysis was accurat…
Do you know if those stats took into account massive economic events? Such as market crashes? Which tend to happen at least once a decade? People often have a point to make, and will often ignore such data to make it. To add to this, outside of honest intent prejudiced with personal bias, there are parties lookong to undermine any aspect of success the West has, by invalidating those successful models.
If your strategy is successful 8/10 years and your lose enough money during the other 2 to be marked as unsuccessful, is that really a "successful model"?
Re: VCs aren’t your friends
#168Earlier 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?
"incentivises the alpha" If they knew where the alpha was, they would go get it. If they could make alpha happen, they would do that.
Carrot? Stick?
Re: VCs aren’t your friends
#169Earlier quoted context omitted.
Nobody who writes a comment like that wants to know why they’re wrong. “Money people bad” is their mantra. You’ll never change it, they’ve swallowed too much propaganda.
Hardly, I'm a CEO.
Is that supposed to mean something? Half of Hacker News is a startup CEO.
By your own logic, you better pay yourself a $0 salary, $0 on secondaries, and invested all your personal savings into the project, because otherwise clearly you don't believe in your own company. Right? And I hope that is also true about every one of your employees?
Re: VCs aren’t your friends
#170Earlier quoted context omitted.
Hardly, I'm a CEO.
Of a company with how many employees?
Seven years in business. Number of staff varies with the environment but we've had as many as 40 on all hands, mostly part-timers with specialised skills.
It's not a very ordinary company. Too many lawyers.