![]() ![]() Here’s another fact some entrepreneurs including me have a hard time understanding: Most VCs hate risks despite their sometimes jovial, easy-going appearance.įirst of all most VCs are quite the opposite of an entrepreneur. So let me finally destroy the first myth here: The picture of a brave, heroic venture capitalist investing in a brand new idea and young first-time founders is pure fiction.Ģ. In almost every case you can only raise venture capital when you are successful already. If you are pitching one venture capital firm at a time: Forget that scenario! Social pressure among venture capital firms in the audience!īut make no mistakes: Besides being irrational and potentially harmful in the long run, getting investors who are not primarily interested in your company is rare and nothing you can expect. The company itself was not the reason to invest, but yes: It is like owning $10,000 and investing $1 into something…Īfter that week that founder almost never heard something back from those venture firms again. Some of them are multi-billion dollar funds…īut, let’s do the math here: How much is $100K of $1bn in percentage? He was able to raise $1.2m from 12 top-notch venture firms within only one week!Įach of these investors had thrown in $100K. In San Francisco, I once had dinner with a founder of a company developing a new type of databases.įour years before our dinner he got a rare spot at a Y Combinator Demo Day.Īt the time he did not have much to show: Such a situation can occur at startup pitch events organized by incubators such as Y Combinator, 500 Startups, Plug and Play etc. these investors then jump into financing with only little interest or understanding but for the only reason of beating one another or not missing out a deal.pitch to many investors simultaneously, and:. ![]() The third exception to the „ success-first-rule“ is the lucky event when you: That is a type of partnership you need to think about twice, as you will probably lose control of your company early on:ģ.) Pitch-Events with competing investors: Usually, those types of firms take a significant share of your company and leave the founder with only a small minority of his shares. The second exception is when a venture capital firm is not a traditional venture firm, but a group of hands-on entrepreneurs who get involved in the operational execution of your idea.
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