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VCs aren’t your friends

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Re: VCs aren’t your friends

#61

Post by fsloth »

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…

In the tweet the wrong date was not a red flag due to lack of detail as such, but because it signaled:

a) they had been raising for a while now

b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit)

So ”the market” did not consider the startup investable, and they did not think about their sales pitch strategically enough … this VC would have liked to be sold to, not just a source of funds.

The implied peer signaling is the key thing here IMO.

Re: VCs aren’t your friends

#62

Post by shermozle »

dmurray wrote: post #30
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…

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_.

Re: VCs aren’t your friends

#63

Post by zandrew »

One of the things I'm surprised isn't covered more is the liquidation preference that VCs take... an investment is basically an extremely expensive loan.

If shit hits the fan, they are entitled to the payout of up to their original investment, so all of the company's assets, when liquidated, fund those proceeds.

If your company succeeds, the VC owns a percentage of your success.

Re: VCs aren’t your friends

#64

Post by xyst »

If there’s one thing ChatGPT could replace: developing “pitch decks” and “cold emails” for vulture capitalists.

Train LLMs using this site and reap that (dangerous) VC money.

Re: VCs aren’t your friends

#65

Post by StackRanker3000 »

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…

> Even for huge artists, from what I've heard merch is where the money is, not ticket or record sales

That’s not quite true. It’s an extreme example, but Taylor Swift’s personal earnings from her current tour is expected to end up in the billions.

Back in the day, touring was something of a marketing tool to sell records, today the records are marketing for the tours (and they build hype, which yields sponsorships and so on). Merch is an important revenue stream, but a large chunk of that is sold on tour.

Re: VCs aren’t your friends

#66

Post by earnesti »

zandrew wrote: post #63

One of the things I'm surprised isn't covered more is the liquidation preference that VCs take... an investment is basically an extremely expensive loan. If shit hits the fan, they are entitled to the payout of up to their original investment, so all of the company's assets, when liquidated, fund those proceeds. If your company succeeds, the VC owns a percentage of your success.

The reason for that is that there is very high likelihood that the "loan" will never be paid back. It is just a market. As far as I understand from the statistics, VC's are not making great money, on average. Average startup gets the funding, uses it for salaries and everything else, and never pays the investor any substantial amount back.

Re: VCs aren’t your friends

#67

Post by Quimoniz »

dmurray wrote: post #30
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…

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.

If I recall Jobs' biography correctly, that came waaay later. First he had to get thrown out of his own company, with the Apple 3 debacle.

Re: VCs aren’t your friends

#68

Post by siva7 »

claudex wrote: post #51

> VCs aren't your teachers nor your managers. They don't have an obligation to provide feedback or even to reply to your emails. They won't give you a second chance. They won't coach you so you can do better next time. Seems like the typical teacher or manager to me.

Spot on.

Re: VCs aren’t your friends

#69

Post by michaelt »

fsloth wrote: post #61
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…

In the tweet the wrong date was not a red flag due to lack of detail as such, but because it signaled: a) they had been raising for a while now b) the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit) So ”the market” did not consider the startup investable, and they did not think about their sales pitch strategically enough … this VC would have liked to be sold to, not just a sou…

> the recipient was not their first choice (ouch, you can hear the ego taking a glancing hit)

It baffles me that a person successful enough to get put in charge of an investment fund can have such incredibly thin skin.

How would you even function in the real world if you were so easily offended?

Re: VCs aren’t your friends

#70

Post by bjornsing »

If there’s anything to be irritated about here it’s that yet another VC revealed how absolutely moronic their job is. Any idiot can look at some slides and see if the numbers are good. The hard part is finding the gems in those bottom 90%. Sadly nobody seems to be doing that.
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