Comments on: Why VCs Aren't More Brave

By: mattmaroon

mattmaroon — Sun, 20 Apr 2008 17:04:03 +0000

It's not exact, but it's close. Not getting paid for a year is losing money to someone with an MBA.

Thanks

By: Kartik Agaram

Kartik Agaram — Sun, 20 Apr 2008 15:03:09 +0000

Using your own money isn't exactly like an all-carry model. If your investments lose money you actually lose money.

Nice post.

By: pheel_more

pheel_more — Thu, 17 Apr 2008 09:37:25 +0000

I like your post (and writing style), especially because you bring some accurate information to the discussion. My own idea was – they are conservative because it is their job. Sometimes VCs are mistaken for charity to the startup world (to put it in bold words), while they are just as focused on their business as entrepreneurs. In my opinion, many resentments have to do with the amount of personal involvement with one's company.

By: skmurphy

skmurphy — Thu, 17 Apr 2008 04:16:51 +0000

I agree with our assessment on Google, there just aren't that many companies that get that big that fast, Cisco was probably the last one to do so in Silicon Valley, and their market cap is less than half of what is was a few years ago.

I have a different assessment of Angels, I don't know that they are braver than VC's, but they don't have to invest and they can have a longer time horizon than VC's. Also, in my experience, Angels would prefer to put the last money in, or at least participate in what is the last round (e.g. via a bridge loan). They don't typically have the wherewithal for follow on rounds. I don't know the breakdown on YC returns is but with a number of early acquisitions they may have backed into this with several of their investments. Also, Angels can have a longer time horizon than the average VC because they don't have to get to a liquidity event within five to seven years from investment (most VC firms raise ten year fund and don't want to return stock in a private firm to their limited partners since it's normally hard to liquidate).