Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

VCs aren’t your friends

openvc.app

Post reply on HN
Print view View original

291–300 of 383 posts

Re: VCs aren’t your friends

#291

Post by drdrek »

cajunboi34213 wrote: post #288
drdrek wrote: post #284

Earlier quoted context omitted.

My career is focused on B2B so I don't know a lot about communities, but the sentiment is the same. You have an edge if you know a lot about a subject and have good connections with professionals in the field that are willing to talk to you. But I would say VCs usually prefer a team as its more likely to check all the boxes. I've heard 3 as the "optimum" for team resilience vs founding team social complexity, but tha…

Community of users applies to b2b as well. It could just be followers on linkedin where you get engagement from your ideal customer profile buyer. VCs looks for signal that you/team will execute. Best signal is undeniable evidence that you are executing and they are just getting on at the right time.

Absolutely, so many people don't understand that a great deck and a tech demo is in 99.9% of the time not enough. You need a strong signal that you are on the right track: user engagement, LOIS, actual sales. The more you can show the better.

If you didn't get to that point don't be surprised if you get the canned response of "This just does not seem like the right opportunity for us".

The first investor in your startup is you. If you are not willing to put your money and time into it don't be surprised other people aren't willing to do it.

Re: VCs aren’t your friends

#292

Post by dblohm7 »

alephnerd wrote: post #267
humansareok1 wrote: post #252

Earlier quoted context omitted.

The number of Stanford Juniors with 1 summer internship at a VC posting 'deep' Startup insights or advice is shocking. Like what do these kids with literally no experience running or starting anything know about companies? It's mind boggling.

VC Internships are intense, and not every Stanford student can land one. While some advice might be a bit meh, a lot of it is information that has value. And, no offense, but there is a massive difference in calibre between a Stanford/Cal/MIT/T10 CS program (they tend to have 2-4% acceptance rates to either the college or the CS department) and other programs. This doesn't mean that there aren't high calibre candidat…

> (they tend to have 2-4% acceptance rates to either the college or the CS department)

This leads me to a broader question: What does their acceptance rate of high schoolers have to do with anything? We're always using that as some kind of proxy, but high schoolers (even the top ones) don't know much...

Re: VCs aren’t your friends

#293

Post by red-iron-pine »

max_ wrote: post #28
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…

VCs like Don Valentine & The founder of Atari actually passed on Steve Jobs because "they were not impressive". It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment.

i'll play devils advocate: what if getting shot down hard by a few respected investors was a push to improve / get slicker with their approach?

Re: VCs aren’t your friends

#294

Post by vidarh »

giansegato wrote: post #277
vidarh wrote: post #271

Earlier quoted context omitted.

It might seem weird, but most VCs are fairly low-margin businesses day to day, then they either get a big payday or not (mostly not), once the fund starts to wind down. The odds of making it big as a general partner in a VC fund are not great. A VC has to live of management fees for the fund, which are a tiny fraction, typically half a percent, and that needs to cover both the initial investment process and all manag…

VC management fees are typically 2%/y. if a VC fund has $100 million in committed capital, the annual management fees would generally be between $2 million and $2.5 million. it's a lot of money.

It really varies. I worked for a VC for years, and it often takes substantial reputation to be able to demand fees like that. It also takes substantial reputation to be able to get high enough quality inbound dealflow to be able to do so with few people.

E.g. I know of a decent number of funds that size or smaller with a staff in the range of 10, a few with well above that. Even at 2% it's suddenly not so much money then, even less so when you start to factor in costs.

EDIT: You may also sometimes "on paper" have fees like that, but quietly offer discounts etc. to convince investors. On top of that comes often quite substantial requirements to buy into the fund for at least senior staff that seriously reduce the de facto salary unless the fund also does well enough that it's the carry that matters.

Re: VCs aren’t your friends

#295

Post by earnesti »

vessenes wrote: post #282
giansegato wrote: post #277

Earlier quoted context omitted.

VC management fees are typically 2%/y. if a VC fund has $100 million in committed capital, the annual management fees would generally be between $2 million and $2.5 million. it's a lot of money.

There's a lot of nuance here. A $100mm fund could be a single guy/gal working from her office, running money in an industry she knows with a little bit of admin support. In that world, $2mm a year in fees is plenty to keep the lights on. Some fund managers I know in this situation don't call all the fee; there may be social considerations / signaling the manager prefers to make. Some spend it all and then some of the…

> Absolutely none of them think that the fee is 'retirement money'

You are sure you can speak for all of them? There are tons of VCs...

To me the 2% running fee sounds pretty nice, combined with somewhat low pressure job compared to many others. Of course it is not nice if your fund doesn't make it but you are guaranteed somewhat cushy position for 5-10 years.

Re: VCs aren’t your friends

#296

Post by red-iron-pine »

max_ wrote: post #253
dpflan wrote: post #236

Earlier quoted context omitted.

Would you mind expanding upon this, detailing the exploitation: "It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment."

There is a very good documentary called Something Ventured[1]. It's really good. I think everyone into Startups must watch this. It's not second hand narration but the real VCs them selves telling the stories so I find it very reliable. So in the documentary there is a section about VCs meeting Steve Jobs & Wozniak for the first time. They passed on the investment saying that they were "not impressive". One of the VC…

so he was good at marketing

Re: VCs aren’t your friends

#297

Post by tptacek »

This is weird, because my understanding and experience of fundraising is that serious prospective investors never get deals from cold inbound slides; they've been introduced, and, most likely, have been talking to the company for months prior to a "formal" start to fundraising, in "no, no, we're not raising money yet, just looking for advice" mode, waiting along with 5-10 other investors for someone to preempt.

This is like a whole mythology constructed around the idea that instead of networking and preparing, you apply to VCs as you would to a college. Does that ever work? I'm seriously asking. (YC doesn't count!)

Re: VCs aren’t your friends

#298

Post by ChrisMarshallNY »

dpflan wrote: post #236
max_ wrote: post #28

Earlier quoted context omitted.

VCs like Don Valentine & The founder of Atari actually passed on Steve Jobs because "they were not impressive". It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment.

Would you mind expanding upon this, detailing the exploitation: "It was only after Steve Jobs exploited their preferential attachment & tendency of VC to succumb to herding effects that he was given investment."

There's a famous old photo of the first Microsofties[0], and is often captioned by "Would You Invest?"

[0] https://i.insider.com/53ad82026bb3f7237a3347bf?width=800&for...

Re: VCs aren’t your friends

#299

Post by mateus1 »

This is the George Costanza approach to VC: you go looking for some minor flaw, make a big deal out of it and then boast/complain to your friends.

I know humans aren’t rational creatures but boasting how you make big investment decisions on a glorified pseudoscience call like you’re Sherlock Holmes is icky.

Re: VCs aren’t your friends

#300

Post by ipaddr »

indigochill wrote: post #57
braza wrote: post #43

For folks that are working on a product right now, given the incentive structures behind venture capital, are there genuine reasons to pursue that kind of money? Let me rephrase: How many folks out there are searching for for some kind of niche business with enough to cover expenses and had some profit in a small scale? I had a short experience with the music industry and the whole enterprise + VC sounds the same dyn…

I've never heard of a musical group or artist who can make a sustainable living on just a local scene (although maybe that's rather the point, since they stayed local to wherever they are). Even for huge artists, from what I've heard merch is where the money is, not ticket or record sales (or today, streaming, which is _ludicrously_ tilted against the artist actually making any money). Admittedly I last looked into t…

Plenty of musical groups make a living locally and not only pop music. If you play a classic instrument you get opportunities for festivals, parades, weddings, local shows. Joining a marching band can pay for your schooling for example.

Many classic rock bands with members in their 40/50/60s perform live, have a local following and make good money without selling CDs.

Cover bands are often local and make good coin without album sales.

Then you have musicians performing children who get paid.

You are never going to be a pop star or a VC rocketship company but few are. But you can make a solid living just performing locally.

Post reply on HN